(  'OMPX.I >f  K  NTS      OF 

E  ])KYDKX,  PRESIDENT 


Paris  Exposition  of  Nineteen  Hundred. 


HISTORY 


OF 


THE  PRUDENTIAL  INSURANCE 
COMPANY  OF  AMERICA 

(INDUSTRIAL   INSURANCE) 
1875-1 


BY 
FREDERICK  L.  HOFFMAN,  F.  S.  S. 

STATISTICIAN  OF 
THE  PRUDENTIAL  INSURANCE  COMPANV  OF  AMERICA 


PRUDENTIAL       PRESS 
1900 


COPYRIGHT  1900, 

BY 
THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 


PREFACE. 


THIS  work  has  been  prepared  at  the  request  of  the  United 
States  Commissioner  to  the  Paris  Exposition  of  1900,  as 
part  of  an  exhibit  of  charts,  diagrams  and  statistics  illus- 
trating fully  the  methods  and  results  of  Industrial  insurance  in 
the  United  States,  as  represented  in  the  history  of  The  Pruden- 
tial Insurance  Company  of  America.  The  time  at  my  command 
for  the  preparation  of  this  work  having  been  very  limited,  I  can 
hardly  hope  to  have  succeeded  in  presenting  the  subject  in  all  its 
essential  aspects  to  the  full  satisfaction  of  the  reader,  but  every 
effort  has  been  made  to  meet  ordinary  requirements  for  informa- 
tion and  data  on  a  subject  here,  for  the  first  time,  dealt  with  on 
a  somewhat  extensive  scale.  In  view  of  the  fact  that  The  Pru- 
dential Insurance  Company  of  America  was  the  first  company 
organized  in  this  country  for  the  transaction  of  an  Industrial 
business  on  the  plan  of  The  Prudential  Assurance  Company  of 
England,  I  believe  that  it  can  be  said,  with  perfect  justice,  that 
the  history  of  The  Prudential  is  the  history  of  American  Industrial 
insurance  ;  for  in  all  measures,  methods  and  results,  the  Company 
has  not  only  had  its  proper  share,  but  it  has  ever  made  the  most 
determined  effort  to  hold  the  first  place  among  American  life  com- 
panies, as  a  progressive  institution  vitally  interested  in  everything 
tending  to  make  the  business  with  which  its  name  is  inseparably 
associated  the  most  successful  of  its  kind,  and  to  offer  the  most 
satisfactory  form  of  insurance  to  the  people,  who  now,  to  the 
extent  of  more  than  three  and  a  half  millions,  are  its  patrons  and 
policy-holders.  I  have  been  compelled,  for  want  of  space,  to  limit 
myself  to  the  barest  recital  of  the  historical  facts  pertaining  to 

(v) 


vi  PREFACE. 

the  early  history  of  the  Company  itself,  and  practically  everything 
of  a  personal  character  relating  to  Mr.  John  F.  Dryden,  Dr.  Leslie 
D.  Ward  and  other  early  and  present  officers  of  the  Company 
has  been  omitted  to  allow  for  as  wide  a  discussion  of  general 
facts  as  possible.  I  feel  very  keenly  the  imperfect  manner  in 
which  I  have  done  justice  to  the  men  to  whose  energy,  skill 
and  abiding  faith  the  Prudential  Company  and  Industrial  insur- 
ance in  general  owe  so  large  a  share  of  the  wonderful  success 
which  has  been  achieved,  but  under  the  circumstances  referred 
to,  no  other  course  was  possible  without  injury  to  the  under- 
taking as  a  whole. 

For  similar  reasons  I  have  been  compelled  to  deal  very  briefly 
with  the  early  history  of  workingmen's  associations  for  life-insur- 
ance purposes,  with  the  worthy  object  of  providing  for  uncertain 
contingencies  by  means  of  fraternal  associations,  gilds,  burial 
clubs  or  friendly  societies,  from  the  latter  of  which  the  present 
form  of  Industrial  insurance  is  able  to  trace  its  origin  by  an  un- 
broken chain  of  historic  evidence.  This  limitation  is  much  to  be 
regretted,  since  many  of  the  works  dealing  with  the  subject,  or 
its  related  aspects,  are  difficult  of  access  to  the  general  reader, 
while  others  are  practically  out  of  print,  and  to  be  found  only  in 
the  larger  libraries  of  New  York  and  Boston.  For  a  complete 
understanding  of  the  causes  which  have  been  productive  of  such 
vast  results  in  the  development  of  modern  Industrial  insurance, 
the  reader  should  make  himself  familiar  with  the  works  of  Cor- 
nelius Walford  on  Gilds  and  Friendly  Societies,  and  with  the  large 
number  of  Parliamentary  reports  on  Friendly  Societies  and  Indus- 
trial Insurance  Companies,  on  Old-Age  Pensions,  Compulsory 
Insurance  and  the  Life  Insurance  of  Children,  published  during 
the  period  1825-1899.  To  these  must  be  added  the  exceedingly 
valuable  paper  of  Mr.  Harben  on  ' '  The  History  of  Industrial 
Assurance,"  published  in  1871  ;  "The  History  of  The  Prudential 
Assurance  Company,"  published  in  1880  ;  Baernreither's  work  on 
* '  English  Associations  of  Workingmen  " ;  T.  Mackay  on  ' '  The 


PREFACE.  Vll 

English  Poor"  and  ''Insurance  and  Saving";  and  C.  H.  E. 
Rea's  paper  on  "Some  Observations  on  Industrial  Assurance," 
published  in  the  Journal  of  the  Institute  of  Actuaries,  July,  1898. 
For  this  country  the  information  is  much  more  limited,  but  the 
student  should  not  fail  to  read  the  address  of  Mr.  Dryden  before 
the  Massachusetts  Legislature  in  1895,  and  the  March,  1898, 
number  of  the  Charities  Review,  containing  an  excellent  paper 
011  the  subject  of  Industrial  Insurance  by  Mr.  Haley  Fiske,  the 
Vice-President  of  the  Metropolitan  Life  Insurance  Company.  A 
valuable  address  on  Industrial  Insurance  was  made  by  Mr.  John 
R.  Hegeman,  the  president  of  the  last-named  company,  at  the 
annual  meeting  of  Insurance  Commissioners  at  Milwaukee, 
September,  1898,  but  the  paper,  not  being  in  general  circulation, 
must  be  applied  for  at  the  office  of  the  company.  Other  infor- 
mation and  minor  publications  can  be  obtained  free  on  application 
to  any  one  of  the  larger  Industrial  companies,  while  the  general 
subject  of  workingmen's  insurance  can  best  be  studied  in  Mr. 
Willoughby's  "Workingmen's  Insurance,"  and  the  United  States 
Labor  Report  on  ' '  Compulsory  Insurance  in  Germany. ' ' 

Had  space  permitted,  I  would  have  added  to  this  volume  a 
bibliography  of  works  and  articles  in  periodical  literature,  but  the 
few  references  given  will  indicate  sources  from  which  valuable 
material  for  the  study  of  this  most  modern  form  of  life  insurance 
can  be  derived.  Some  of  the  more  important  articles  can  easily 
be  traced  through  Poole's  index  of  periodical  literature,  under 
the  titles  of  Insurance,  Life  Insurance,  Industrial  Insurance, 
Child  Insurance,  etc.,  while  a  brief  discussion  of  controversial 
matter  can  be  found  in  "The  Development  of  Thrift,"  by  Miss 
Mary  Willcox  Brown  (New  York,  1899). 

This  work  would  have  been  impossible  but  for  two  facts, 
which  may  be  mentioned  in  explanation  of  some  points  other- 
wise likely  to  be  imperfectly  understood.  The  writer  has,  for  a 
number  of  years,  been  engaged  in  the  collection  of  material  for  a 
larger  and  more  complete  work  on  Industrial  insurance  in  this 


viii  PREFACE. 

and  other  countries,  and  from  the  partly  completed  manuscript  of 
the  larger  work  this  sketch  has  been  prepared  to  meet  the  wishes 
of  the  United  States  Commissioner  to  the  Paris  Exposition.  It  is, 
therefore,  more  than  probable  that  within  a  few  years  this  book 
will  be  followed  by  another  of  a  more  satisfactory  nature,  supple- 
menting many  matters  here  imperfectly  dealt  with.  Another 
factor  of  some  importance,  and  one  which  is  only  too  often  absent 
in  similar  discussions  of  social  and  economic  problems,  is  that  the 
writer  has  had  many  years  of  actual  field  experience,  having 
commenced  his  connection  with  the  business  as  an  agent,  succes- 
sively filling  the  higher  positions  of  assistant  and  superintendent 
in  charge  of  districts  in  the  East,  West  and  South.  I  have 
thus  had  exceptional  opportunities  to  verify  field  observations 
by  extensive  office  investigations,  and  I  may  add  that  there 
is  not  in  this  work  a  single  statement  of  fact  or  theory  which 
has  not  the  support  of  personal  observation  and  experience. 
On  account  of  the  peculiar  nature  of  the  business  of  Industrial 
insurance,  the  relations  of  agents  to  policy-holders  are  so  very 
close  and  personal  that  there  is  little  of  importance  affecting  the 
daily  life  and  struggle  of  working  people  that  fails  to  come  to  the 
knowledge  of  the  intelligent  observer  who,  week  after  week,  calls 
upon  the  same  people  for  the  purpose  of  collecting  the  weekly 
premiums.  Their  difficulties,  trials,  hardships  and  final  successes 
are  known  to  him  ;  he  is  their  friend  and  they  are  his  friends, 
and  he  is  often  their  adviser,  counsellor  and  aid  in  emergen- 
cies. Coming  in  such  close  contact  with  hundreds  of  thousands 
of  our  wage-earners  of  all  types  and  nationalities,  engaged 
in  every  occupation,  the  Industrial  agent  has  opportunities  for 
study  and  observation  which  fall  to  the  lot  of  only  the  very  few, 
and  I  can  not  but  think  that  in  the  light  of  this  personal 
experience  I  may  be  pardoned  for  having  at  times  expressed 
myself  with  exceptional  emphasis  in  favor  of  the  character  of  our 
industrial  population  and  its  struggle  for  economic  independence. 
I  am  convinced  that  if  those  who  think  ill  of  the  masses,  and 


PREFACE.  IX 

who  see  in  their  humble  endeavors  little  deserving  of  praise 
and  much  to  blame,  would  go  and  really  live  among  the  plain 
people,  they  would  soon  realize  that  beneath  all  of  the  apparent 
sordidness  and  selfishness  there  lies  much  nobility  of  effort  and  of 
aim.  The  more  I  have  seen  of  working  people,  the  more  I  have 
learned  to  respect  their  motives,  their  efforts  and  the  results  of 
their  struggle,  and  the  less,  I  acknowledge  with  shame,  do  I 
think  of  the  efforts  and  results  of  those  who,  under  vastly  better 
conditions,  with  far  greater  opportunities,  fall  materially  short  of 
what,  by  a  reasonable  standard,  we  have  a  right  to  expect. 

In  the  preparation  of  this  volume  I  have  been  materially 
aided  by  the  editors  and  publishers  of  a  number  of  our  more  im- 
portant insurance  publications,  especially  Mr.  Walter  S.  Nichols, 
of  the  Insurance  Monitor;  Mr.  Clifford  Thomson,  of  the  Spectator; 
Mr.  J.  A.  Fowler,  of  the  Exchange  and  Review  ;  and  the  editor 
of  the  Weekly  Underwriter,  who  have  been  good  enough  to  ex- 
tend to  me  the  loan  of  their  complete  files,  extending  in  some 
instances  over  a  period  of  more  than  fifty  years. 

I  am  also  under  obligations  to  the  Insurance  Commissioners 
of  the  various  States  for  valuable  data  and  information  relative  to 
the  results  of  official  investigations  into  the  practice  of  Industrial 
insurance  ;  to  the  Health  and  Charity  officials  of  nearly  all  the 
States  and  large  cities  for  valuable  statistics  and  data  indirectly 
relating  to  the  business  ;  to  Mr.  Julius  Clarke,  of  West  Newton, 
Mass.,  and  Mr.  John  B-  Clark,  of  New  Haven,  Conn.,  for  infor- 
mation relating  to  the  early  history  of  the  business  in  this  country  ; 
to  Mr.  John  K.  Gore,  the  Actuary  of  The  Prudential,  and  Mr.  F. 
S.  Crum,  my  associate  in  office,  for  the  reading  of  the  manuscript 
of  this  work  and  valuable  aid  and  suggestions  which  have  mate- 
rially diminished  the  possibility  of  occasional  errors  and  uninten- 
tional misstatements.  But  most  of  all,  I  am  under  a  debt  of  grati- 
tude to  Mr.  John  F.  Dry  den  and  Dr.  Leslie  D.  Ward,  respectively 
the  President  and  Vice-President  of  The  Prudential,  for  complete 
freedom  in  making  use  of  the  records  and  archives  of  the  Company 


X  PREFACE. 

and  for  every  possible  aid  in  making  this  work  one  of  interest 
and  value  to  the  student  of  Industrial  insurance  and  its  relation 
to  the  general  progress  of  the  industrial  population  of  this  coun- 
try. I  trust  that  I  have  discharged  my  duty  to  the  satisfaction 
of  those  into  whose  hands  this  volume  may  fall ;  that  I  have  not 
materially  fallen  short  in  my  effort  to  do  justice  to  the  founders 
of  the  Company,  who  have  made  Industrial  insurance  the  busi- 
ness success  of  the  age  ;  and  that  I  have  done  equal  justice  to  the 
millions  of  honest,  high-minded  men  and  women  who  are  the 
patrons,  as  they  are  the  policy-holders  and  true  makers  of  The 
Prudential  Insurance  Company  of  America. 

F.  L.  H. 


761  Broad  Street, 

Newark,  N.  J. 


TABLE  OF  CONTENTS. 

CHAPTER.  PAGK. 

I.  INTRODUCTION, i 

II.  EARLY  WORKINGMEN'S  INSURANCE  IN  AMERICA,  .  6 

III.  INDUSTRIAL  INSURANCE  BEFORE  1874, 20 

IV.  INDUSTRIAL  INSURANCE  IN  AMERICA  IN  1874,    .    .  39 
V.  THE  PRUDENTIAL  FRIENDLY  SOCIETY,  1875,  ...  55 

VI.    THE  PRUDENTIAL  FRIENDLY  SOCIETY,  1876-1877,  .     84 

VII.    THE   PRUDENTIAL   INSURANCE  Co.   OF   AMERICA, 

1877-1879,      .    .    .' 94 

VIII.    THE   PRUDENTIAL  INSURANCE  Co.   OF  AMERICA, 

1879-1880, 108 

IX.    THE    PRUDENTIAL   INSURANCE   Co.    OF  AMERICA, 

1881-1884, 133 

X.    THE    PRUDENTIAL   INSURANCE   Co.    OF   AMERICA, 

1885-1888, 158 

XI.    THE   PRUDENTIAL   INSURANCE   Co.    OF  AMERICA, 

1889-1891, 175 

XII.    THE   PRUDENTIAL  INSURANCE   Co.    OF  AMERICA, 

1892-1893, 187 

XIII.  THE   PRUDENTIAL  INSURANCE   Co.    OF  AMERICA, 

1894-1896, 202 

XIV.  THE   PRUDENTIAL   INSURANCE   Co.    OF   AMERICA, 

1897-1898, 235 

XV.    THE   PRUDENTIAL  INSURANCE   Co.    OF  AMERICA, 

1899, 266 

XVI.    SUMMARY  OF  CONCLUSIONS  AND  RESULTS,  ....   284 
INDEX, 319 

(xi) 


PORTRAITS   AND   ILLUSTRATIONS. 

OPPOSITE  PAGE. 

JOHN  F.  DRYDEN,  President, i 

JULIUS  I/.  CLARKE  AND  JOHN  E.  CLARK, 48 

HOME  OFFICE  OF  THE  PRUDENTIAL  FRIENDLY  SOCIETY, 

1875-1878, 55 

FIRST    APPLICATION    RECEIVED    BY    THE    PRUDENTIAL 

FRIENDLY    SOCIETY, 58 

LESLIE   D.    WARD,  Vice- President, 69 

FIRST  INDUSTRIAL    POLICY  FORM   USED    BY   THE    PRU- 
DENTIAL INSURANCE  Co.  OF  AMERICA, 96 

HOME  OFFICE  OF  THE  PRUDENTIAL  INSURANCE  Co.  OF 

AMERICA,   1878-1883,      100 

KDGAR   B.   WARD,    Second   Vice-President   and   Counsel,  .    127 

HOME  OFFICE  OF  THE  PRUDENTIAL  INSURANCE  Co.  OF 
AMERICA,  1883-1892,      147 

FORREST   F.   DRYDEN,    Secretary, 183 

PRESENT  HOME-OFFICE  BUILDINGS  OF  THE  PRUDENTIAL 
INSURANCE  Co.  OF  AMERICA,     .    .    . 191 

INDUSTRIAL  POLICY  FORM  AT  PRESENT  IN  USE  BY  THE 

PRUDENTIAL  INSURANCE  Co.  OF  AMERICA, 236 

PAID-UP    POLICY   FORM   AT   PRESENT    IN   USE    BY   THE 

PRUDENTIAL  INSURANCE  Co.  OF  AMERICA, 238 

INDUSTRIAL    APPLICATION    FORM   AT    PRESENT   IN  USE 

BY  THE  PRUDENTIAL  INSURANCE  Co.  OF  AMERICA,  .   240 

INDUSTRIAL  AGENT'S  AGREEMENT  AT  PRESENT  IN  USE 
BY  THE   PRUDENTIAL  INSURANCE  Co.   OF  AMERICA,   242 


o 

OF  TH« 

UNIVERSITY 


HISTORY 

OF 

THE   PRUDENTIAL   INSURANCE 
COMPANY   OF  AMERICA. 


CHAPTER   I. 

INTRODUCTION. 

The  history  of  The  Prudential  Insurance  Company  is,  in  a 
large  measure,  the  history  of  Industrial  insurance  in  America, 
Founded  in  1875  by  Mr.  John  F.  Dryden,  the  present  President 
of  the  Company,  it  was  the  first  organization  of  its  kind  to  prac- 
tically demonstrate  the  possibility  of  extending  the  benefits  of 
life  insurance  to  the  masses,  and  the  first  to  demonstrate  to 
the  industrial  population  that  life-insurance  principles,  properly 
applied,  could  be  made  to  serve  the  useful  purpose  of  providing 
for  the  burial  expenses  of  every  member  of  the  family,  in  return 
for  a  small  weekly  charge  collected  from  the  house  of  the 
insured.  Mr.  Dryden  was  the  first  among  a  number  of  American 
insurance  managers  to  put  to  a  successful  test  the  methods  of 
the  British  Prudential  Assurance  Company,  and  the  first  to 
recognize  the  possibilities  of  family  insurance  on  the  Industrial 
plan  in  the  United  States.  All  efforts  in  this  direction  previous 
to  1875  had  failed  ;  every  variety  of  co-operative  or  other  form 
of  workingmen's  insurance  had  been  tried  and  found  wanting, 
and,  instead  of  acting  as  an  incentive  to  savings  and  thrift,  these 
forms  of  pseudo-insurance  had  acted  as  a  direct  discouragement, 
and,  instead  of  tending  to  diminish  pauperism  and  want,  these 
organizations,  on  account  of  their  inherent  worthlessness,  were 
partly  responsible  for  an  amount  of  out-door  relief  and  public 
support  in  illness  and  at  death  such  as  has  not  been  known 

(i) 


2  HISTORY  OF  THE   PRUDENTIAL. 

since  Industrial  insurance  became  an  active  factor  in  the  social 
economy  of  the  American  population. 

Recognizing  that  ' '  Political  Economy  is  concerned  with 
the  facts  of  industrial  life ' '  and  that  ' '  this  involves  a  treatment 
of  past  industrial  life,  the  forces  which  have  been  at  work  and 
which  have  made  it  what  it  is  to-day,"  *  I  have  largely  confined 
my  sketch  to  a  statement  of  the  underlying  causes  making 
for  the  establishment  of  The  Prudential  and  the  subsequent 
development  and  present  success  of  Industrial  insurance  in 
America. 

It  has  justly  been  said,  by  a  great  French  writer  on  English 
history  and  civilization,  that  "Whoever  attentively  considers  the 
English  turn  of  mind  will  be  struck  by  the  fact  of  a  twofold 
nature  :  on  one  side  practical  ability,  and  on  the  other  the  absence 
of  general  ideas  and  elevation  of  mind  on  purely  theoretical 
questions,"  and,  "whether  we  turn  to  works  on  history  or  juris- 
prudence or  any  other  subject,  we  rarely  find  that  the  great 
fundamental  causes  of  things  have  been  investigated."  These 
remarks  of  Guizot  apply  with  special  force  to  the  history  of  life 
insurance  and  in  particular  to  that  modern  branch  of  the  business 
which  is  to-day,  the  English-speaking  world  over,  known  by 
millions  of  working  people  as  "  Industrial  Insurance." 

With  this  idea  in  mind,  the  following  sketch  has  been  pre- 
pared as  a  contribution  towards  a  better  study  of  the  all-important 
problem  of  life  insurance  for  the  masses  and  a  better  knowledge 
of  a  form  of  insurance  which,  though  familiar  to  millions  of  the 
industrial  population,  is  practically  unknown  to  even  the  most 
thoroughly  informed  students  of  sociology  and  political  economy. 
While  Mr.  Spencer  could  speak  of  Friendly  Societies  as  the  most 
familiar  instances  of  co-operation  among  working  people,  and 
rightly  included  "certain  other  bodies  of  kindred  natures,  chiefly 
burial  societies"  and  "  Industrial  Assurance  Societies  ;  doing  for 
the  poor  what  the  more  conspicuous  institutions  for  averaging  the 
risks  of  fire,  accidents,  etc.,  do  for  the  better  off,"  t  it  is  only  too 
true  that  this  form  of  insurance,  of  saving  and  thrift  has  almost 
completely  escaped  the  notice  of  the  economist  and  been  practi- 
cally ignored  by  writers  on  what  Mr.  Spencer  has  so  well  defined 
as  forms  of  * '  social  structure. ' ' 


*  Richard  T.  Ely,  Problems  of  To-Day,  p.  100. 
t  Principles  of  Sociology,  Vol.  III.,  p.  556. 


INTRODUCTION.  3 

Industrial  insurance  differs  from  ordinary  level-premium  life 
insurance  in  the  following  four  essential  points :  first,  the 
premiums  are  payable  weekly,  instead  of  being  payable  quar- 
terly, semi-annually  or  annually ;  second,  the  premiums  are 
collected  from  the  house  of  the  insured  by  an  agent  of  the 
company,  instead  of  being  payable  at  the  office  of  the  company  ; 
third,  the  amounts  of  insurance  are  adjusted  to  the  unit  pre- 
mium, instead  of  the  premium  being  adjusted  to  the  amount — 
that  is,  in  Industrial  insurance  certain  amounts  of  insurance 
can  be  purchased  for  a  premium  of  five  cents  per  week  or 
multiples  thereof,  while  in  Ordinary  insurance  the  amount  is 
in  round  numbers  and  usually  in  multiples  of  one  thousand 
dollars ;  fourth,  every  member  of  the  family  can  be  insured 
for  a  small  premium,  while  in  Ordinary  insurance,  as  a  rule, 
only  the  head  of  the  family  is  insured  for  a  proportionately 
large  amount. 

In  the  sense  of  this  definition  Industrial  insurance  is  prac- 
tically mass  insurance,  while  Ordinary  insurance  is,  in  a  measure, 
class  insurance,  and  the  popularity  of  the  former  and  its  extent 
may  be  attributed  to  the  fact  that,  for  reasons  inherent  in  the 
four  cardinal  principles,  the  system  provides  for  contingencies 
and  acts  as  a  protection  against  uncertainties  which  are  not 
provided  for  by  any  other  form  of  saving  or  of  thrift.  ^Combin- 
ing with  all  the  elements  of  security  of  Ordinary  level-premium 
companies  a  convenience  or  propinquity  in  the  manner  of  paying 
the  premiums  from  week  to  week  out  of  weekly  wages,  the 
method  of  Industrial  insurance  has  thus  far  been  proven  to  be 
best  adapted  to  the  wants  and  convenience  of  the  industrial 
population;  hence  the  term  ''Industrial,"  which  has  from  the 
beginning  distinguished,  and  properly  so,  this  form  of  insurance 
from  life  insurance  on  the  Ordinary  plan  for  the  more  prosperous 
elements  of  the  population.  The  business  was  called  ' '  Industrial ' ' 
by  the  first  company  which  attempted  to  develop  the  system  in 
England,  in  1849, — that  is,  "The  Industrial  and  General"  ;  and 
while  most  of  the  companies  transacting  this  form  of  insurance 
are  at  the  same  time  transacting  an  Ordinary  business,  often 
reaching  vast  proportions,  the  Industrial  part  of  the  business 
is  always  separately  managed  and  separately  valued,  with  its 
funds  separately  invested,  similar  to  the  manner  in  which  the 
business  and  funds  of  English  Fire  and  lyife  companies  are  kept 
apart. 


4  HISTORY   OF   THE   PRUDENTIAL. 

Having  defined  the  principles  of  Industrial  insurance,  I 
add  here  a  brief  definition  of  its  immediate  and  remote  objects, 
which  will  partly  explain  its  wonderful  success  from  a  purely  busi- 
ness standpoint  of  financial  importance.  The  underlying  purpose 
of  Industrial  insurance  is  to  provide  for  the  expenses  of  burial  and 
the  cost  of  the  last  illness  of  every  member  of  the  family,  and 
thus  make  unnecessary  the  assistance  of  the  State  or  of  charitable 
agencies  in  meeting  a  call  for  funds  at  a  time  when  such  funds 
are  needed  most.  The  abhorrence  of  pauper  support,  especially 
for  the  burial  of  the  dead,  is  a  pronounced  trait  of  every  self- 
respecting  man,  and  only  those  who  are  familiar  with  the  life 
and  the  labor  of  the  industrial  masses  can  fairly  grasp  the  deeper 
meaning  of  the  abhorrence  of  a  pauper  burial  of  a  member  of  the 
family  in  the  potter's  field.  Only  those  who  for  years  have  come 
into  intimate  contact  with  the  masses  can  understand  the  unwil- 
lingness of  wage-workers,  or  what  I  have  elsewhere  called  the 
industrial  masses,  to  avail  themselves  of  the  dispensary  doctor 
during  the  last  illness  of  a  father  or  a  child  ;  hence  the  readiness 
or  willingness  on  the  part  of  the  masses  to  make  use  of  life  insur- 
ance on  the  Industrial  plan  as  a  method  of  providing  for  these 
contingencies.  It  has  been  well  said  by  E.  Demolins  that  "a 
man  who  is  conscious  of  his  respectability  is  naturally  inclined 
to  increase  it,"*  and,  as  a  first  step  in  this  direction,  a  pro- 
vision against  pauper  burial  and  pauper  medical  attendance 
must  be  looked  upon  as  a  most  effective  means  to  elevate  or 
ameliorate  the  lot  of  the  average  man. 

To  understand  this  trait — for  such  it  is — among  Anglo-Saxon 
peoples,  it  is  necessary  to  take  into  account  Germanic  origins 
which  have  remained  race  traits  up  to  the  present  time.  To  bury 
the  dead  was  an  ancient  obligation,  and  even  in  the  early  days  of 
the  Northmen  there  is  recorded  a  famous  passage  in  the  ' ' Kdda ' ' 
which  mentions  "the  different  deaths  which  men  may  die,"  and 
which  contains  the  counsel  and  demand  "  That  thou  give  the  dead 
man  burial  wherever  thou  shalt  find  him."  According  to  Tacitus, 
"  Funerals  among  the  Germans  "  of  his  day  "  were  of  the  highest 
importance,"  and  in  the  words  of  Mr.  Gummere,  from  whose  work 
I  have  just  quoted,  "Whatever  is  sanctioned  by  religion  and 
dateless  customs  comes  to  be  regarded  as  a  virtue,"  and  by  the 
same  author,  in  another  passage,  ' '  it  seems  reasonable  to  infer 

*  Anglo-Saxon  Superiority,  p.  183. 


INTRODUCTION.  5 

for  the  whole  Germanic  race  a  general  sense  of  the  immense  im- 
portance of  funeral-rites. ' '  *  This  respect  for  the  memory  of  the 
dead  became  in  time  an  obligation  for  survivors  to  make  proper 
provision  for  the  burial  of  the  departed,  and  is  met  with  among 
all  peoples  and  at  all  times,  but  most  so  among  the  early  Romans, 
the  Germans  and  the  English,  where  we  find  abundant  proof  of 
an  ever-present  recognition  of  the  decent  burial  of  the  dead  as  a 
social  duty  which  had  to  be  discharged,  even  though  other  duties 
had,  for  the  time  being,  to  be  ignored. 

In  most  of  the  charters  of  ancient  associations,  the  Roman 
Collegia  and  the  Gilds  of  the  middle  ages,  provision  was  made 
for  the  burial  of  the  dead  as  one  of  the  most  important  duties  to 
be  discharged  by  one  member  of  the  association  towards  the 
other.  After  the  destruction  of  the  Gilds  by  Henry  VIII., 
Friendly  Societies  and  Burial  Clubs  came  into  existence,  largely 
for  the  purpose  of  fulfilling  one  of  the  essential  functions  of  the 
former  Gilds — that  is,  the  proper  burial  of  the  dead.  Out  of 
these  clubs  and  societies  Industrial  insurance  was  developed  in 
England,  the  first  company  for  the  purpose  of  transacting  such  a 
business  having  been  founded  in  1849,  under  the  name  of  the 
"Industrial  and  General."  This  company  was  absorbed  in  1854 
by  the  Prudential  Assurance  Company,  which  commenced  the 
transaction  of  an  Industrial  business  in  that  year,  its  attention 
having  been  called  to  the  need  for  such  an  extension  of  insurance 
principles  to  the  masses  by  a  Parliamentary  report  on  ' '  Assurance 
Associations"  in  1853.! 


*  Germanic  Origins,  pp.  306,  321,  322. 

f  Report  on  Assurance  Associations,  London,  1853,  P-  yi-  :  "Your  Com- 
mittee feel  that  the  ground  [s]  hitherto  occupied  by  these  useful  institu- 
tions have  been  comparatively  limited  and  that  their  application  is  capable 
of  a  great  extension,  not  only  in  the  higher  and  middle  classes  of  society, 
but  also  among  the  humbler  classes,  to  whom  it  has  recently  been  very 
considerably  applied ;  and  that  it  is  therefore  very  important  that  no  check 
or  impediment  should  be  placed  in  the  way  of  the  further  extension  of  this 
enterprise,  not  absolutely  needful  for  the  security  of  the  public." 


HISTORY   OF  THE   PRUDENTIAL. 


CHAPTER  II. 
EARLY  WORKINGMEN'S  INSURANCE  IN  AMERICA. 

Briefly  explained,  the  underlying  purpose  of  Industrial 
insurance  has  its  justification  in  an  inherent  trait  of  Anglo- 
Saxon  peoples  to  make  provision  for  the  proper  and  respectful 
burial  of  the  dead.  Under  the  earlier  forms  of  association, 
as  Gilds,  Fraternities  or  vSecret  Orders,  this  object  was  accom- 
plished largely  on  the  basis  of  status  and  a  kindly  spirit  of 
brotherly  regard,  fully  in  harmony  with  the  conditions  of  the 
time.  During  more  recent  years  the  condition  of  status  has 
largely  passed  away,  giving  place  to  the  condition  of  contract, 
in  which  sums  certain  are  insured  for  in  place  of  indefinite 
promises  made  by  associations  operating,  contrary  to  their  inten- 
tions, on  an  unscientific,  and  unbusinesslike  basis. 

Modern  conditions  in  a  free  democracy  make  it  imperative 
that  each  man  shall  take  care  of  his  own,  or,  as  Professor  Sumner 
has  put  it,  "  Every  man  and  woman  in  society  has  one  big  duty. 
That  is,  to  take  care  of  his  or  her  own  self.  This  is  a  social 
duty.  For,  fortunately,  the  matter  stands  so  that  the  duty  of 
making  the  best  of  one's  self  individually  is  not  a  separate  thing 
from  the  duty  of  filling  one's  place  in  society,  but  the  two  are 
one,  and  the  latter  is  accomplished  when  the  former  is  done. ' '  * 
For  fifty  years  previous  to  the  establishment  of  The  Prudential 
in  the  city  of  Newark,  N.  J.,  workingmen,  in  their  own  way  and 
at  their  own  cost,  made  efforts  to  provide,  by  means  of  the 
principle  of  association,  for  the  contingencies  of  illness  and  of 
death.  It  is  a  long  and  interesting  history,  which  has  never 
been  written  and  which  has  only  rarely  been  touched  upon  by 
historians.  That  the  principle  of  "  providing  by  the  association 
of  the  many  for  the  contingencies  likely  to  affect  the  few ' '  is 
weak  and  inherently  false  when  applied  to  life  contingencies, 
unless  the  laws  of  human  mortality,  of  sickness  and  finance 

*  What  Social  Classes  Owe  to  Each  Other,  p.  113. 


EARLY  WORKINGMEN'S  INSURANCE  IN  AMERICA.        7 

are  properly  recognized  and  rigorously  applied,  is  self-evident 
to  all  familiar  with  the  science  of  life  insurance.  The  early 
forms  of  association — secret  orders,  as  they  have  been  called — 
recognized  fully  the  general  principle  of  association ;  and  while 
they  accomplished  much  good  by  its  application,  they  failed 
completely  the  moment  they  added  to  their  benefit  features  a  life- 
insurance  provision  for  a  sum  certain,  without  taking  account  of 
the  laws  of  human  mortality  and  finance.  With  all  the  good  which 
these  associations  have  accomplished,  they  have  fallen  lamentably 
short  in  this  respect,  and  countless  millions  of  hard-earned  money 
have  been  sunk  in  ' '  Fraternal  Orders ' '  or  other  forms  of  work- 
ingmen's  insurance  associations,  for  which  neither  a  fraternal  or 
financial  return  has  ever  been  made.  Providing  for  the  wants  of 
the  few  at  the  expense  of  the  many  is  a  complete  perversion  of 
the  principle  of  association,  a  principle  fully  deserving  to  be  more 
completely  understood  and  recognized  by  economists  and  writers 
on  social  problems,  since  it  lies  at  the  root  of  all  modern  efforts 
to  improve  the  methods  of  production  and  distribution  for  the 
benefit  of  the  masses. 

I,ife  insurance  as  carried  on  by  corporations  or  companies  is 
solely  a  question  of  contract,  while  all  forms  of  organizations 
such  as  Fraternal  Orders  are  either  wholly  or  largely  operated  on 
the  ancient  basis  of  status.  The  former  method  concerns  itself 
principally  with  the  question  of  security  for  the  performance  of 
its  accepted  obligations,  while  the  latter  has  for  its  object  a  multi- 
tude of  aims,  with  but  small  regard  for  the  contract  or  business 
nature  of  its  implied  obligations.*  Such  organizations  existed  in 
this  country  long  before  even  Ordinary  life  insurance  assumed 


*  This  point  is  well  brought  out  by  Mr.  Sydney  Webb,  perhaps  the 
highest  authority  on  Trades  Unions,  in  his  recently  published  work, 
"  Industrial  Democracy,"  pp.  154  and  155,  where  it  is  said  that  "A  member 
who  has  paid  a  whole  life-time  to  the  sick  and  superannuation  funds  may 
at  any  moment  be  expelled  and  forfeit  all  claims  for  reasons  quite  uncon- 
nected with  his  desire  for  insurance  in  old  age.  Against  the  decision  of  his 
fellow-members  there  is  in  no  case  any  appeal ;  moreover,  the  scale  of 
contributions  and  benefits  may  at  any  time  be  altered  even  to  the  extent 
of  abolishing  the  benefits  altogether ;  and  such  alterations  do,  in  fact,  even 
take  place  in  spite  of  all  the  protests  of  the  minorities  of  old  members. 
*  *  *  It  is  a  further  aggravation  that  in  any  crisis  the  Trades  Union, 
unlike  the  Friendly  Society,  regards  the  punctual  discharge  of  sick  and 
superannuation  liabilities  as  a  distinctly  secondary  consideration. 


8  HISTORY   OF   THE   PRUDENTIAL. 

definite  proportions,  and  the  Odd  Fellows,  for  instance,  had  a 
large  membership  before  the  first  active  American  life  company 
was  organized,  in  1843.  Occasionally  some  of  the  principles  of 
the  system  of  Industrial  insurance  were  partly  recognized  and 
partly  incorporated  in  the  various  efforts  to  improve  the  condi- 
tion of  the  masses ;  but,  standing  alone,  all  of  such  efforts  came 
to  an  early  end  and  proved  useless  undertakings.  Thus,  for 
example,  the  element  of  weekly  saving  by  the  weekly  payment 
of  small  sums  for  a  future  contingency  was  recognized  as  early 
as  about  1820  by  the  Philadelphia  Fuel  Saving  Society,  which 
required  members  to  deposit  weekly  small  sums  of  money  to 
provide  for  the  winter  supply  of  fuel.  The  principle  of  family 
insurance  was  partly  carried  out  in  the  practice  of  the  Pennsyl- 
vania Company  for  the  Insurance  of  Lives,  organized  in  1812, 
which  accepted  risks  at  ages  as  low  as  eight  years,  indicating 
that  even  at  this  early  period  life  insurance  at  the  younger  ages 
was  thought  desirable,  if  for  no  other  purpose  than  as  an  encour- 
agement of  the  habits  of  saving  and  thrift  in  early  life. 

It  was  not,  however,  until  1847  that  the  nrst  effort  was  made 
to  provide  genuine  life  insurance  for  the  masses,  and,  while  the 
|  experiment  proved  a  failure,  it  is  of  considerable  interest  from  an 
\historical  standpoint,  as  a  strong  indication  of  the  early  need  of 
the  masses  for  life  insurance  on  the  weekly-payment  plan.  The 
credit  for  having  tried  this  experiment  belongs  to  the  Mutual 
Benefit  Life  Insurance  Company,  of  Newark,  N.  J.,  which  com- 
pany, in  1847,  offered  to  the  less  prosperous  classes  a  policy  on 
which  premiums  of  twenty-five  or  fifty  cents  could  be  paid 
weekly,  but,  no  provision  having  been  made  for  the  collection  of 
the  premiums,  the  plan  proved  a  failure  and  few  if  any  policies 
seem  ever  to  have  been  issued.]  The  views  of  this  company  on 
the  subject  of  "  Life  Insurance  for  All  "  are  clearly  set  forth  in  a 
little  publication  called  "The  American  Manual  of  Life  Insur- 
ance, ' '  in  which  it  is  stated  that  life  insurance  ' '  is  a  mode  of 
accumulation  open  to  all  classes  of  men  in  all  pursuits  of  life," 
that  "the  merchant,  the  minister,  the  mechanic,  the  farmer  and 
the  laborer  may  all  avail  themselves  of  it  to  some  extent  with 
ease,  and  to  the  greatest  advantage,"  and  "it  is  therefore  truly 
an  investment  for  the  millions." 

To  meet  the  demand  for  mass  insurance  at  this  early  period, 
a  form  of  association  was  brought  into  existence  which  in  part 
resembled  the  English  Friendly  Societies,  and  in  a  larger  part 


WORKINGMEN'S  INSURANCE  IN  AMERICA.        9 

the  trading  and  business  organizations  of  the  present  day. 
"Health  Insurance,"  as  it  was  called,  attempted  to  provide 
for  support  in  sickness  and  for  a  burial  fund  at  death,  but, 
without  exception,  all  the  societies  of  this  name  organized 
between  1845  and  1855  came  to  an  early  end,  in  consequence  of 
inherent  weakness  and  the  absolute  impossibility  of  transacting 
a  sick-benefit  business  through  the  medium  of  a  non-fraternal 
organization.  Although  the  early  health-insurance  companies 
all  came  to  an  end  by  about  1855,  a  revival  of  these  organizations 
occurred  during  the  sixties,  when  in  a  somewhat  similar  form 
another  effort  was  made  to  gain  permanent  public  support, 
which,  however,  was  again  followed  by  failure.  Very  little 
seems  to  have  been  known  in  this  country  as  to  the  practice  of 
English  Friendly  Societies  and  practically  nothing  of  the  system 
of  Industrial  insurance  as  practiced  at  this  time  by  the  ' '  Indus- 
trial and  General"  and  the  "British  Industry,"  which  com- 
menced the  Industrial  business  in  1852  and  had  by  this  time 
issued  a  considerable  number  of  policies. 

The  first  American  reference  to  the  system  of  Industrial 
insurance,  as  practiced  in  England,  occurs  in  Hunt* s  Merchant' s 
Magazine*  for  1851,  in  which  the  editor,  Freeman  Hunt,  called 
attention  to  the  recent  English  experiment  by  the  '  *  Industrial 
and  General ' '  in  the  following  quotation  from  the  Liverpool 
Chronicle : — 

' '  We  have  had  our  attention  directed  to  a  brochure  bearing 
the  title  '  What  is  Life  Insurance  ? '  written  by  the  Rev.  J.  B. 
Beade.  It  is  in  the  form  of  a  dialogue  between  two  laboring 
men,  and  is  mainly  calculated  to  show  the  illiterate  and  unthink- 
ing the  great  advantages  offered  by  well-regulated  and  stable  as- 
surance associations.  '  The  Industrial  and  General  Life  Insur- 
ance and  Deposit  Company  '  has  been  instituted,  and  arranged  on 
a  plan  expressly  to  meet  the  requirements  of  persons  of  limited 
incomes  accruing  at  short  periods.  With  a  view  of  adapting  it 
to  the  wants  and  wishes  of  the  industrial  classes,  the  directors 
have  arranged  to  grant  assurances  and  annuities  as  low  as  ^5,  at 
premiums  payable  weekly,  monthly,  quarterly,  or  annually." 
This,  as  far  as  I  know,  is  the  first  distinct  mention  of  the  modern 
practice  of  Industrial  insurance  in  any  American  publication, 
but  the  article  seems  to  have  attracted  little  attention  and  had  no 

*  Vol.  XXIV.,  p.  521. 


10  HISTORY  OF  THE   PRUDENTIAL. 

influence  in  establishing  Industrial  insurance  in  the  United  States. 
At  this  time  Savings  Banks,  Health  Insurance  Companies  and 
Secret  Fraternal  Societies  were  apparently  more  promising  and 
more  satisfactory  methods  of  insurance  and  saving,  though,  as  a 
matter  of  fact,  all  forms  of  life  insurance  were  looked  upon  with 
but  a  small  degree  of  favor  by  otherwise  well-informed  public 
journals  and  men  of  influence  and  power. 

Thus,  in  the  year  1853,  the  New  York  Times,  in  a  lengthy 
argument,  maintained  the  view  that  "  He  who  insures  his  life  or 
health  must  be  indeed  a  victim  of  his  own  folly  or  others'  knav- 
ery,"  and  a  Mr.  A.  B.  Johnson,  a  Baltimore  banker  and  writer 
on  economic  subjects,  expressed  himself  forcibly  against  the 
theory  of  life  insurance  and  in  favor  of  the  theory  and  practice  of 
savings  banks,  holding  that  all  life  insurance  was  wrong  in  prin- 
ciple and  false  in  practice,  and  that  savings  banks  alone  furnished 
a  proper  means  for  the  investment  of  the  surplus  funds  of  the 
people.  It  may  not  be  out  of  place  to  give  some  space  to  Mr. 
Johnson's  views,  since  they  were  re-published  in  his  book  on 
"Our  American  Union"  in  1857.*  The  writer  argued  that  "if 
no  life  insurance  would  provide  for  our  families  after  our  decease, 
no  health  insurance  or  club  would  provide  for  ourselves  during 
disease,  and  bury  us  decently  when  dead,  we  should  [would] 
provide  for  these  purposes  by  self-denying  accumulations." 
Mr.  Johnson  did  not  stop  here,  but  quoted  some  English  data 
and  made  the  distinct  charge  that  "  L,ife  insurance  is  unfavorable 
to  domestic  purity,"  and  "in  Kngland,  mothers  have  been  con- 
victed of  murdering  their  infants  to  obtain  some  petty  sums 
which  certain  clubs  bestow  for  funeral  expenses  on  members 
whose  children  die."  This  is,  as  far  as  I  know,  the  first  instance 
of  the  charge  of  child-murder  for  insurance  money  made  in  this 
country  against  the  system  of  life  insurance  for  persons  of  young 
ages.  Mr.  Johnson  was  wrong  in  his  confusion  of  ideas  as  to 
Knglish  burial  clubs,  which  never  represented  a  distinct  form  of 
insurance  associations  organized  on  actuarial  principles.  He 
admitted  that  the  insurance  was  only  for  decent  burial  purposes, 
and  he  brought  no  proof  to  support  his  monstrous  allegation 
of  child-murder  for  insurance  money,  an  assertion  made  solely  for 
the  purpose  of  emphasizing  his  views  and  opinions  in  favor  of 

*  A  Guide  to  the  Right  Understanding  of  our  American  Union,  N.  Y., 
1857,  p.  263  et  seq. 


EARLY  WORKINGMEN'S  INSURANCE  IN  AMERICA.      n 

savings  banks  for  the  masses.  Mr.  Johnson's  article  attracted 
considerable  attention,  and  was  answered  by  the  then  President  of 
the  Mutual  L,ife  Insurance  Company,  Mr.  J.  B.  Collins,  who  ably 
refuted  the  absurd  propositions  of  the  writer.  Mr.  Collins' s  forci- 
ble argument  induced  the  editor  of  Hunt' }s  Magazine  to  publicly 
disavow  any  responsibility  for  Mr.  Johnson's  views,  and  to  express 
himself  as  being  strongly  in  favor  of  life  insurance  "  as  a  method 
of  delivering  human  life  from  the  tyranny  of  chance,"  and  as  a 
means  or  arrangement  "by  which  all  the  insured  become  pos- 
sessed at  once,  for  the  benefit  of  their  survivors,  of  accumulated 
property,  and  in  which  no  one,  in  any  contingency,  can  be  con- 
sidered a  loser. ' '  * 

What  was  needed  at  this  period  was  a  more  extensive  dis- 
cussion of  life-insurance  principles,  with  which  the  most  intelli- 
gent were  practically  unfamiliar.  Agents  were  rarely  employed 
on  an  extensive  scale  by  even  the  larger  companies,  and  the 
real  facts  pertaining  to  the  business  seldom  came  to  public 
knowledge. 

One  of  the  first  public  journals  to  give  intelligent  considera- 
tion to  life  insurance  was  Rhodes' s  United  States  Advertiser,  f 
which  in  1854  contained  a  lengthy  dissertation  on  this  subject,  its 
general  history,  object  and  principles,  the  article  concluding  with 
the  statement  that  ' '  There  is  a  wide  and  increasing  field  for  the 
operations  of  life  assurance  in  the  United  States,  and  even  in  the 
city  of  New  York.  The  subject  requires  to  be  familiarized  to  the 
intelligent  middle  classes  of  the  people.  Much  can  yet  be  done  in 
this  country  to  popularize  life  assurance  and  bring  it  within  the 
reach  of  even  the  humblest  classes."  This  is,  as  far  as  I  know, 
the  first  distinct  plea  for  the  extension  of  life-insurance  principles 
to  the  industrial  population  of  the  United  States.  It  was  made  at  a 
time  when  all  life  insurance  in  this  country  was  in  its  infancy, 
when  the  largest  company  in  existence  had  only  a  little  over 
8,000  policies  in  force,  and  when  the  total  number  of  policies  in 
the  United  States  was  estimated  at  only  30,000. 

Lack  of  familiarity  with  the  English  experiment  in  the 
direction  of  extending  life  insurance  to  the  masses,  and  a  well- 
founded  aversion  to  the  existing  forms  of  so-called  Health  or 


*  Vol.  XXVII.,  p.  541. 

t  Insurance  Monitor,  1854,  p.  38. 


12  HISTORY   OF   THE    PRUDENTIAL. 

Co-operative  insurance,  induced  the  editor  of  Tucketf  s>  Insur- 
ance Journal*  to  advocate  at  this  time  the  extension  of  life 
insurance  to  the  masses  in  a  manner  and  by  a  method  which  only 
during  recent  years  has  been  applied  with  any  degree  of  scien- 
tific accuracy.  Mr.  Tuckett's  suggestion,  that  "Canvassing 
from  home  to  home  will  furnish  the  largest  amount  of  business 
and  afford  the  highest  amount  of  remuneration,"  made  clear 
his  conception  of  the  value  of  life  insurance  for  all,  and  the 
need  of  direct  personal  explanation  to  the  people  of  the 
methods  and  objects  of  the  business.  Gradually,  the  view 
that  life  insurance  could  be  made  available  to  all  of  the  ele- 
ments of  the  population,  the  rich,  the  middle  class  and  even  the 
poor,  had  gained  ground.  By  1858  some  of  the  leading  news- 
papers had  taken  up  the  question,  and,  among  others,  the  Boston 
Herald  expressed  the  opinion  that  "There  is  another  branch  of 
insurance  which  demands  more  attention  than  it  has  thus  far 
received — we  mean  life  insurance — that  is,  the  class  of  individu- 
als whose  families  depend  upon  their  daily  exertion  should 
insure  their  lives  more  frequently  than  they  do  " ;  and  hence  the 
conclusion  that  ' '  Those  who  could  not  afford  to  pay  for  large 
policies  could,  with  a  little  extra  economy,  pay  the  premiums 
upon  a  policy  for  $1,000,  or  upon  a  policy  for  a  few  hundred, 
which  would  have  been  of  invaluable  aid  to  their  families  in  case 
the  bread-winner  himself  is  taken  away."f  The  suggestion  of 
the  Herald  was  fully  supported  by  the  fact  that  at  that  time  the 
"  humbler  classes  "  did  not  avail  themselves  to  any  appreciable 
extent  of  life  insurance  on  the  Ordinary  plan,  for  out  of  830  new 
applicants  in  the  New  England  Mutual  L,ife,  a  Massachusetts 
insurance  company,  only  thirty-one  were  mechanics,  while  the 
remainder  were  all  men  in  well-paying  positions,  or  men  of 
considerable  income  and  means.  Some  companies  since  1840,  at 
least,  had  granted  insurance  for  sums  as  low  as  $100,  but  the 
demand  for  this  form  of  insurance  had  been  very  small.  J  It  was 
not  merely  a  question  of  amounts,  but  much  more  a  question  of 


*  Tuckett's  Insurance  Journal,  1853,  p.  43. 

t  Hunt's  Merchant's  Magazine,  Vol.  XXXVIII.,  p.  626. 

J  "According  to  an  advertisement  of  the  New  York  I,ife  Insurance  and 
Trust  Company,  published  in  Williams's  New  York  Annual  Register  for  1840, 
life  insurance  was  offered  at  ages  fourteen  years  and  upwards  for  sums  as 
low  as  $100." 


EARLY  WORKINGMEN'S  INSURANCE  IN  AMERICA.      13 

the  mode  of  paying  the  premiums,  and  for  these  improvements 
and  the  consequent  introduction  in  this  country  of  the  Industrial 
plan  of  insurance  on  the  weekly-premium  basis,  the  time  had  not 
arrived  in  1859.  That  there  was  an  open  field  and  large  oppor- 
tunity for  the  extension  of  the  efforts  to  insure  the  masses  was 
not  only  recognized  by  influential  insurance  and  financial  jour- 
nals, but  also  by  at  least  one  of  the  officers  of  one  of  the  large 
insurance  companies  of  the  day.  In  a  speech  made  at  a  conven- 
tion of  life-insurance  companies  in  1859,  Dr.  R.  M.  Reese,  Medical 
Examiner  of  the  Knickerbocker  Life  Insurance  Company,  referred 
to  the  subject  as  follows  :  "I  allude  to  the  importance  of  greatly 
extending  the  benefits  of  Life  Insurance  among  the  masses,  by 
creating  public  opinion,  and  educating  the  whole  people  into 
enlightened  views  of  the  duty  of  every  man,  living  in  a  land 
where  casualty  and  disease  expose  him  to  the  hazard  of  early 
and  even  sudden  death."  * 

By  1860  Ordinary  life  insurance  had  assumed  considerable 
proportions,  and  insurance  journalism  had  developed  into  a 
distinct  branch  of  literature.  According  to  the  census  of  that 
year,  there  were,  in  the  United  States,  forty-seven  companies  for 
the  insurance  of  lives,  having  an  aggregate  amount  of  insurance  in 
force  of  about  $180,000,000,  on  60,000  lives.  Among  the  foremost 
insurance  journals  of  the  period  we  must  name  the  Insurance  Moni- 
tor, a  journal  devoting  a  large  amount  of  its  space  to  the  technical 
discussion  of  the  perplexing  problems  confronting  the  life-insur- 
ance companies  of  this  period.  The  Monitor,  following  TuckcW s 
Journal,  had  frequently  argued  in  behalf  of  a  more  extensive 
development  of  insurance  principles,  but,  as  has  been  pointed 
out,  very  little  had  thus  far  been  done  to  meet  these  wants,  while 
the  effort  of  the  ' '  Health ' '  insurance  companies  had  been 
a  delusion  and  a  fraud.  In  the  latter  part  of  1860  the  Moni- 
tor, in  an  article  on  ' '  Life  Insurance  for  the  Poor, ' '  f  referred 
to  the  subject  of  insurance  for  the  masses,  as  follows:  "  Every 
workingman  should  know  that  for  one  shilling  a  week — a  penny 
more  or  less,  according  to  his  age — he  can  leave  $500  at  death, 
and  have  his  fair  share  of  the  profits  of  the  company."  This  is, 
as  far  as  I  know,  the  first  distinct  attempt  to  interest  the  "  poor  " 
of  this  country  in  life-insurance  questions ;  and  while  the  term 

*  Insurance  Monitor,  June,  1859. 
f  Insurance  Monitor,  1860,  p.  207. 


14  HISTORY   OF  THE   PRUDENTIAL. 

"poor"  is  one  of  indefinite  meaning  and  wide  application,  we 
may  safely  assume  that  the  writer  referred  to  the  masses  of  people 
earning  weekly  wages,  for  it  will  be  noticed  that  he  argues  in 
favor  of  insurance  based  on  a  weekly  premium  of  one  shilling, 
or  about  twenty -five  cents.  This  plea  for  workingmen's  insur- 
ance on  the  weekly-payment  plan  proved,  however,  also  a  useless 
one,  and  no  one  seems  to  have  considered  it  worth  while,  at 
this  period,  to  undertake  the  transaction  of  this  form  of  insurance. 

By  1860  the  difficulty  of  extending  level-premium  insurance 
to  the  masses  had  been  fairly  well  recognized.  On  the  one  hand, 
it  was  apparent  that  direct  solicitation,  through  the  medium  of 
agents,  by  a  house-to-house  canvass,  was  absolutely  necessary  to 
familiarize  the  masses  with  the  principles  and  objects  of  insur- 
ance. On  the  other  hand,  it  was  equally  clear  that  the  system 
required  modification,  both  in  the  mode  of  paying  the  premiums 
and  in  the  opportunity  offered  for  insurance  for  small  amounts. 
Among  others,  Mr.  Klizur  Wright,  somewhat  in  harmony  with 
Mr.  Tuckett,  expressed  himself  on  this  question  as  follows  : 
1 '  Forethought  and  mutuality  of  effort  to  provide  the  most  effect- 
ually against  future  contingencies  are  not  a  spontaneous  growth 
of  the  human  soil.  It  is  a  matter  of  special  cultivation  ;  the  result 
only  of  some  sort  of  missionary  labor,  notwithstanding  its  manifest 
coincidence  with  the  highest  interests  of  all  concerned."  * 

Mr.  Wright  clearly  recognized  the  importance  and  necessity 
of  the  canvassing  insurance  agent,  and  in  concluding  his  argu- 
ment expressed  himself  as  follows  on  this  point :  ' '  Among  the 
honorable  workers  in  the  civilized  world  to  whom  the  public  as 
well  as  the  insured  will  die  indebted,  we  give  faithful  and  suc- 
cessful life  insurance  agents  a  high  place.  It  is  hardly  possible 
to  believe  that  a  life  insurance  agent  can  achieve  any  long-con- 
tinued success  without  bringing  into  action  some  of  the  noblest 
qualities  of  a  sterling  man,  and  no  field  that  we  know  of  is  more 
inviting  to  an  ambition  that  would  devote  the  best  of  talents  to 
the  benefit  of  society  at  large  and  individuals  in  particular."  f 

What  was  true  of  Ordinary  insurance  was  still  more  true  of 
Industrial  insurance  on  the  weekly-payment  plan.  Among  the 
industrial  population  practically  nothing  was  known  of  the  prin- 
ciples on  which  the  science  of  insurance  is  founded,  and  of  the 

*  Mass.  Ins.  Report  for  1863. 
t  Ibid, 


EARLY  WORKINGMEN'S  INSURANCE  IN  AMERICA.      15 

results  of  life  insurance  as  they  were  fairly  known  and  recog- 
nized among  the  more  prosperous  elements  of  the  population.  It 
is  not  too  much  to  say  that  there  was  very  little  faith  in  insur- 
ance principles,  and  that  the  entire  scheme  of  so-called  "  Frater- 
nal" insurance,  of  "  Health"  insurance,  or  of  insurance  on  the 
co-operative  plan,  was  looked  upon  rather  as  a  form  of  specula- 
tion or  even  as  a  game  of  chance,  than  as  a  legitimate  method  of 
investing  surplus  earnings  for  the  purpose  of  providing  for  future 
contingencies.  An  immense  amount  of  missionary  work  was 
necessary  to  acquaint  the  masses  with  the  facts  which  would  tend 
to  make  possible  a  universal  recognition  of  the  adequacy  of 
insurance  principles  as  applied  to  Industrial  insurance  on  the 
weekly-payment  plan. 

In  looking  back  over  the  quarter-century  which  has  passed 
since  Industrial  insurance  was  successfully  introduced  in  this 
country,  by  the  establishment  of  The  Prudential  in  1875,  the  fact 
which  stands  out  broadly  as  perhaps  its  greatest  triumph  is  the 
absolute  confidence  of  millions  of  working  people  in  the  financial 
solvency  of  the  institutions  which  carry  on  this  business  at  the 
present  time.  So  absolute  is  this  confidence,  so  firm  is  this  faith, 
that  it  is  not  too  much  to  say  that  in  this  country,  as  in  Kngland, 
the  average  workingman  looks  upon  an  Industrial  policy  as  the 
more  prosperous  look  upon  the  possession  of  a  government  bond. 
This  much-to-be-desired  result  has  been  brought  about  by  the 
careful  management  of  representative  Industrial  companies,  not 
one  of  which  has  ever  failed  to  meet  its  obligations,  and  by  the 
work  of  tens  of  thousands  of  agents,  who  daily  carry  into  the 
homes  of  the  people  the  gospel  of  insurance  in  one  direction  and 
the  gospel  of  thrift  in  every  other  direction. 

In  view  of  the  clear  recognition  on  the  part  of  Mr.  Wright, 
of  certain  practical  aspects  of  the  insurance  problem,  it  is  rather 
curious  that  he  should  have  failed  to  recognize  the  intrinsic  value 
of  the  principles  of  Industrial  insurance,  or  family  insurance  on 
the  weekly-payment  plan.  Rather  to  the  contrary,  such  refer- 
ences as  were  made  by  Mr.  Wright,  in  his  public  reports  as 
Insurance  Commissioner  of  Massachusetts,  to  the  practice  of  In- 
dustrial insurance  in  England,  were  adverse  to  its  extension  to 
the  United  States  on  the  ground  of  its  being  inimical  to  public 
policy.  Mr.  Wright,  as  early  as  1865,*  expressed  himself  in 

*  Tenth  Mass.  Ins.  Report,  1865. 


l6  HISTORY   OF  THE   PRUDENTIAL. 

opposition,  not  only  to  the  insurance  of  children,  but  also  to  the 
insurance  of  persons  above  sixty,  and,  while  opposed  to  the 
Industrial  companies  and  by  implication,  at  least,  to  the  Friendly 
Societies,  he  fully  approved  of  Gladstone's  plan  of  post-office 
insurance,  which  was  introduced  at  this  period  as  a  government 
measure,  which,  it  was  claimed,  would  produce  the  same  results 
in  life  insurance  as  had  been  achieved  in  another  direction  through 
the  medium  of  Post-Office  Savings  Banks,  although  subsequent 
experience,  extending  now  over  thirty-five  years,  has  clearly 
proven  that  State  trading  in  the  direction  of  life  insurance  for  the 
masses  on  a  voluntary  basis  has  been  a  distinct  failure,  in  spite 
of  the  energetic  efforts  which  have  been  employed  to  make  it  a 
success. 

In  his  advocacy  of  Government  Insurance  Mr.  Wright  had 
the  support  of  the  New  York  Times,  which  endorsed  the  theory 
that  the  condition  of  the  industrial  masses  was  likely  to  be 
materially  improved  through  the  medium  of  Government  Insur- 
ance for  small  amounts  ;  but  the  Insurance  Monitor  properly 
directed  attention  to  the  fact  that  what  was  attempted  by  means 
of  Government  Insurance  had  already  been  accomplished  by 
the  British  Prudential  through  its  system  of  Industrial  insur- 
ance, and  that  the  company  at  that  time — that  is,  in  1864 — had 
already  174,000  policies  in  force  on  the  weekly-payment  plan. 
When  it  is  considered  that  the  largest  Ordinary  life  company 
in  the  United  States  had  in  1864  only  a  little  over  12,000  policies 
in  force,  it  will  be  readily  understood  that  this  statement  of 
the  actual  progress  and  results  of  the  British  Prudential  must 
have  had  a  considerable  effect  on  the  public  mind,  and  on  reflec- 
tion it  must  have  been  apparent  that  what  was  true  for  England 
was  equally  true  for  this  country,  namely,  in  the  words  of  the 
Insurance  Monitor  (1864),  that  "  the  tendency  of  life  insurance  now 
is  towards  small  amounts. ' '  But  at  this  period  co-operative  insur- 
ance, health  insurance,  trade  benefit  societies,  etc.,  were  looked 
upon  as  more  likely  to  accomplish  for  this  country  what  the 
Prudential  had  already  accomplished  for  England.  In  New  York 
State  alone,  303  mutual  aid  societies,  for  benefit  in  sickness  and 
assistance  at  burial,  had  been  organized  during  the  period 
1848-' 66,  while  countless  other  insurance  and  aid  associations  had 
been  organized  in  different  parts  of  the  country,  but  of  all  those 
established  previous  to  1865  practically  none  remains  in  existence 
at  the  present  time.  In  making  reference  to  one  of  these 


EARLY  WORKINGMEN'S   INSURANCE   IN   AMERICA.         17 

extinct  associations,  the  New  York  Policemen's  Insurance  Fund, 
the  Monitor  (1865,  p.  191)  touched  upon  the  subject  of  insurance 
for  the  masses  in  the  following  words  :  "  Life  insurance  in  all  of  its 
forms  is  so  great  a  blessing  that  we  can  never  tire  of  recommend- 
ing its  features  and  progress,  and  urging  it  upon  every  class  of 
our  fellow-citizens.  When  everybody  is  insured,  then,  but  not 
until  then,  shall  we  know  that  the  voice  of  warning  and  of 
counsel  in  this  respect  may  properly  be  hushed." 

While  emphatically  in  favor  of  insurance  for  the  masses  the 
Monitor  and  other  insurance  journals  missed  no  opportunity  to 
condemn  the  large  number  of  impracticable  schemes  constantly 
placed  before  the  public  under  the  name  of  health  insurance 
or  co-operative  insurance,  all  of  which  were  inherently  weak 
and  unable  to  survive  more  than  a  generation  at  the  best.  Refer- 
ring to  the  revival  of  health  insurance  at  this  period,  the  Monitor 
denounced  its  impracticability  in  words  which  were  not  likely  to  be 
misunderstood.  "As  health  insurance  in  this  country  and  in 
England  (meaning  the  Friendly  Societies)  has  proved  a  delusion 
and  a  snare  and  has  terminated  disastrously  to  the  insured,  con- 
sisting solely  of  the  poorer  classes,  we  should  deplore  a  repetition 
of  an  experiment  that  has  so  little  chance  of  success."  Referring 
to  the  same  subject,  the  Spectator  in  1868  condemned  the  plea  for 
health  insurance  as  one  which  was  "  successfully  and  ingeniously 
framed,  and  therefore  all  the  more  dangerous."  With  equal 
emphasis,  the  Insurance  Times  spoke  of  health  insurance  as 
"founded  on  a  fraudulent  fallacy,  which  could  only  survive  by 
deceiving  and  robbing  the  poor." 

In  defense  of  these  associations  it  was  argued  by  the  manager 
of  one  of  them  that  "The  object  is  to  extend  the  benefits  of 
insurance  to  a  class  of  people  heretofore  entirely  neglected,  and 
by  judicious  and  scientific  management  this  branch  of  insurance 
can  not  only  be  made  the  most  secure  and  profitable,  but  it  will 
also  prove  a  benefactor  to  the  working  classes." 

Since  all  of  these  associations  were  practically  founded  on 
guesswork,  with  no  attempt  to  provide  a  financial  basis  for 
maturing  obligations,  it  was  only  a  question  of  time  when 
failure  had  to  take  place  ;  and  of  all  the  associations  that  were 
established  at  this  period,  of  whatever  name,  claiming  to  provide 
insurance  for  the  industrial  masses,  not  a  single  one  survives 
at  the  present  time,  and  all  these  futile  efforts  to  effect  so-called 
cheap  insurance  represent  an  immense  loss  to  those  who  could 


18  HISTORY   OF  THE   PRUDENTIAL. 

least  afford  to  waste  their  money  in  worthless  enterprises  of 
this  kind. 

It  is  impossible  for  me,  for  want  of  space,  to  discuss  here  the 
question  of  co-operative  insurance  and  the  rise  and  fall  of  these 
societies,  as  well  as  the  cause  of  their  inevitable  insolvency  and 
decay.  They  represent  a  dreary  repetition  of  the  well-known 
story  of  the  workingmen's  insurance  associations  of  Bngland, 
without  the  redeeming  feature  of  workingmen's  insurance  on  the 
Friendly  Society  plan.  No  more  instructive  lesson  is  furnished 
by  life-insurance  history  than  that  which  deals  with  the  gloomy 
record  of  co-operative  or  other  forms  of  associations  attempting 
to  furnish  so-called  life-insurance  protection  in  defiance  of  life- 
insurance  principles.  Unfortunately,  the  very  term  ' '  co-opera- 
tive" has  been  almost  universally  misunderstood,  and  a  special 
meaning  has  been  attached  to  the  word  which  has  remained  in 
common  use  up  to  the  present  time,  and  is  likely  to  remain  so 
for  many  years  to  come.  As  Mr.  Spencer  has  well  pointed  out, 
"Social  life  in  its  entirety  is  carried  on  by  co-operation,  and  the 
use  of  the  word  to  distinguish  a  special  form  of  social  life  is  a  nar- 
row use  of  it."  *  But  this  view  of  Mr.  Spencer  has  not  yet  found 
acceptance  in  common  thought ;  rather  to  the  contrary,  it  is  the 
opinion  of  the  masses,  who  believe  in  this  special  form  of  co-opera- 
tion, and  who  agree  with  Professor  Ely,  that  "  Co-operation  con- 
templates a  complete  though  peaceful  transformation  of  society," 
and  that  the  method  by  which  this  is  to  be  accomplished  is  to  se- 
cure economy  by  the  abolition  of  the  middle-men. t  Unfortunate 
consequences  must  naturally  result  from  such  confusion  of  princi- 
ples and  facts. 

Originating  at  a  time  when  life  insurance  on  the  part  of 
the  masses  was  being  demanded  to  an  ever-increasing  degree, 
these  associations,  often  parading  under  high-sounding  titles,  and 
often  supported  by  the  names  of  men  of  prominence  in  the  com- 
munity, imposed  upon  the  credulous  masses  a  sham.  An  excel- 
lent illustration  of  one  of  these  concerns  is  furnished  by  the 
Manhattan  Co-operative  Relief  Association,  organized  in  New 
York  in  1868.  From  the  outset  this  association  was  condemned 
by  the  Spectator  and  other  insurance  journals,  as  a  "monstrous 
fraud,"  and  as  nothing  more  or  less  than  "insurance  for  an 

*  Principles  of  Sociology,  Vol.  III.,  p.  553. 
t  The  Labor  Movement  in  America,  p.  169. 


EARLY  WORKINGMEN'S  INSURANCE  IN  AMERICA.      19 

uncertain  amount  at  uncertain  cost. ' '  It  represented  only  prom- 
ises, and  in  nowise  offered  a  guaranty  of  results,  though,  in  the 
words  of  the  Spectator,  ' '  Those  who  are  familiar  with  even  the 
elementary  principles  which  govern  life  contingencies  do  not  need 
to  be  told  that  the  scheme  is  as  utterly  impossible  in  practice  as  it 
is  wild  in  theory."*  Unfortunately,  the  masses  and  even  the 
educated  and  well-to-do  of  this  period  had  but  hazy  conceptions  of 
the  principles  of  life  insurance,  and  it  is  a  fact  worthy  of  notice 
that  a  scheme  so  plainly  speculative  had  the  support  of  emi- 
nently respectable  journals  like  the  Church  Union  and  The 
Independent,  and  of  secular  publications  like  the  Atlantic  Monthly 
and  the  New  York  Tribune,  in  which  the  concern  was  exten- 
sively advertised.  As  regards  the  Church  Union,  it  was  stated 
at  the  time,  with  much  truth,  that  "it  was  the  laudation"  of 
the  editor  of  this  journal  "that  first  gave  repute  and  standing 
to  the  delusion  and  enabled  its  concocters  to  inveigle  agents 
into  its  service,  and  to  employ  them  to  deceive  the  people."  f 

After  a  brief  period  the  Manhattan  Co-operative  Relief  Asso- 
ciation went  out  of  existence,  and  the  money  that  had  been  put 
into  the  Association  by  ignorant  policy-holders  was,  of  course,  a 
total  loss  ;  but  in  spite  of  actual  experience,  in  spite  of  emphatic 
condemnation  on  the  part  of  qualified  critics,  of  the  insurance 
press  and  the  Insurance  Commissioners  of  the  various  States,  in 
the  absence  of  a  more  legitimate  and  permanent  form  of  insurance, 
such  as  could  have  been  furnished  on  the  Industrial  plan,  similar 
associations  flourished  for  a  short  period  in  all  parts  of  the  coun- 
try. Moreover,  they  are  in  existence  to-day,  numbering  their 
members  by  the  million,  although  the  handwriting  on  the  wall 
has  for  years  pointed  to  an  enormous  loss,  and  the  annual  crop 
of  failures  has  brought  misery  and  loss  to  hundreds  of  thousands, 
who  in  these  associations  had  invested  their  all.  A  complete 
perversion  of  the  principle  of  association  is  not  likely  to  prove  a 
means  for  the  permanent  amelioration  of  the  condition  of  the 
industrial  population. 


ERA/TrS. 

OF  THX  X 


*  Spectator,  1868,  p.  271. 

t  Insurance  Times,  1868,  p.  472. 


20  HISTORY   OF  THE   PRUDENTIAL. 


CHAPTER  III. 

INDUSTRIAL   INSURANCE    BEFORE    1874. 

By  1868  Ordinary  life  insurance  had  reached  almost  stupen- 
dous proportions,  but,  as  has  been  previously  pointed  out,  thus 
far  there  had  been  no  distinct  effort  to  make  level-premium 
insurance  available  to  the  industrial  population  by  improvements 
and  changes  in  the  method  of  premium  payments.  Thousands 
of  ventures  under  the  name  of  health  insurance,  co-operative 
insurance  or  life  insurance  by  the  secret  orders  had  proven  inade- 
quate to  the  demand.  Association  after  association,  company 
after  company  had  been  organized,  flourished  for  a  short  time 
and  failed.  Even  under  the  distinct  name  of  workingmen's  or 
laboringmen's  insurance  a  number  of  companies  or  societies 
made  efforts  to  gain  a  firm  footing,  but  without  success.  JThus, 
in  1868  there  was  organized  the  People's  Life  Insurance  Company 
for  industrial  classes,  in  the  city  of  New  York,  and  in  1869  the 
Miners'  and  Mechanics'  Life  Association  of  Missouri,  the  Labor- 
ingmen's Life  Insurance  Company  of  Chicago,  the  Workingmen's 
Life  Insurance  Company  of  New  Orleans,  the  New  York  Work- 
ingmen's Benefit  Company,  and  also  the  Workingmen's  Union 
in  the  city  of  New  York,  but  none  of  these  companies,  on  account 
of  inherent  defects,  was  able  to  attain  to  even  a  fair  degree  of 
prosperity  and  financial  stability,  and  all,  without  exception, 
came  to  an  early  end.  That  these  associations  were  created  or 
developed  in  answer  to  a  distinct  demand  on  the  part  of  the 
working-people  for  some  form  of  life  insurance  is  self-evident 
from  a  study  of  the  prospectuses,  which,  as  a  rule,  state,  as  the 
object  in  devising  the  scheme,  that  "it  is  to  render  the  blessings 
of  life  insurance  more  than  ever  accessible  to  the  industrial 
classes."  Unfortunately,  the  promoters  erred  in  assuming  that 
what  was  wanted  on  the  part  of  the  masses  was  ' '  cheap  ' '  insur- 
ance, rather  than  insurance  on  a  plan  of  premium  payment  more 
convenient  and  more  in  harmony  with  their  ability  to  pay.  In 


INDUSTRIAL   INSURANCE   BEFORE    1874.  21 

some  instances  the  premiums  were  to  be  paid  monthly,  but  in  all 
cases  the  fundamental  principles  of  life  insurance  were  violated 
and  the  ignorance  of  the  promoters  of  these  organizations  of  the 
practice  and  principles  of  the  business  was  evident  from  the  fact 
that,  as  a  rule,  all  classes  of  members  were  accepted  without 
distinction  as  to  age, — the  cause  of  insolvency  and  failure  in  the 
English  Friendly  Societies. 

In  1867  the  Insurance  Monitor  recognized  the  increasing 
necessity  of  insurance  for  the  masses,  stating  that  "Working 
people,  and  all  whose  families  are  supported  by  daily,  weekly  or 
monthly  wages,  stand  more  in  need  of  life  insurance  than  any 
other  class. ' '  For  this  reason  the  Monitor  advised  improvements 
in  the  mode  of  paying  the  premiums,  "which  would  render  the 
task  much  easier  of  fulfillment  than  formerly  to  persons  of  moder- 
ate means."  In  1868  the  Monitor  further  discussed  the  question 
as  to  ' '  Who  and  how  many  may  insure  their  lives' '  as  follows  : 
' '  Whether  life  insurance  will  finally  be  so  far  cheapened  and 
popularized  that  the  working  masses,  mechanics  and  laborers, 
those  depending  on  weekly  wages,  can  be  persuaded  to  a  general 
adoption  of  the  practice,  must  depend  largely  on  moral  and  intel- 
lectual training.  Life  insurance  presupposes  a  community  of 
refined  tastes,  social  affections  and  correct  moral  conviction.  In 
proportion  as  our  people  advance  to  the  higher  planes,  the  custom 
will  widen  and  deepen  among  the  foundation  classes."  After 
some  further  remarks,  the  Monitor  concluded  that  ' '  The  common 
people,  as  well  as  sagacious  business  folk,  begin  to  understand  its 
value."  Up  to  this  time,  however,  the  weekly -premium  plan  of 
the  British  Prudential  had  remained  practically  unknown  to  the 
insurance  journalists  of  the  period,  and,  although  the  British 
Prudential  by  1868  had  approximately  170,000  policies  in  force, 
no  one  writing  on  insurance  subjects  seems  to  have  been  familiar 
with  its  practice  and  results. 

One  company,  the  American  Popular  L,ife,  organized  in  1866 
as  a  level-premium  company,  following  the  effort  of  the  Mutual 
Benefit  of  Newark  in  1847,  had  offered  to  accept  premiums 
weekly,  monthly,  quarterly  or  annually,  but,  as  far  as  I  have 
been  able  to  learn  from  correspondence  with  some  of  its  officers, 
very  little  business  was  ever  transacted  on  the  weekly  plan. 

vThe  first  distinct  effort  to  establish  Industrial  insurance  in  the 
United  States  would  seem  to  have  been  made  by  a  Mr.  Peacock, 


22  HISTORY  OF  THE   PRUDENTIAL. 

of  Zanesville,  Ohio,  who,  according  to  the  Insurance  Times 
for  1868  (p.  232),  had  "made  a  special  study  of  life  insurance  in 
its  adaptation  to  the  industrial  classes,"  and  "  devised  a  system 
by  which  he  hopes  to  bring  the  benefit  of  the  institution  within 
the  reach  of  the  poorest  laborer,  and  render  it  more  available 
to  him  in  life  and  to  his  heirs  at  his  death,  than  by  any  other 
hitherto  adopted."  This  attempt  on  the  part  of  Mr.  Peacock 
seems  to  have  been  the  first  effort  to  establish  Industrial  insurance 
in  the  United  States,  but  there  is  no  evidence  to  show  that  the 
plan,  so  briefly  outlined,  was  ever  actually  carried  into  effect, 
and  insurance  history  is  silent  as  regards  one  who  thus  early 
recognized  the  need  of  the  masses  for  legitimate  life  insurance 
on  the  Industrial  plan.  No  doubt  the  item  attracted  attention, 
and  possibly  had  some  influence  in  bringing  about  another 
similar  effort  during  the  latter  part  of  the  year  1868. 

The  Insurance  Times  for  October,  1868,  makes  mention  of 
The  Industrial  Life  Insurance  Company,  which  ' '  title  has  been 
adopted  by  a  new  organization,  whose  formation  exhibits  the 
expansive  vitality  of  good  seed  planted  in  a  rich  soil.  It  is  to  be 
a  purely  stock  company,  promising  no  profits  to  the  insured,  and 
will  have  a  capital  of  $i  25,000."  Among  its  incorporators  was 
Mr.  William  H.  Beers,  at  that  time  Vice-President  of  the  New 
York  Life.  The  Insurance  Times  stated  that  the  company  would 
"be  a  thorough  and  legitimate  life  insurance  company,  but  more 
especially  adapted  to  the  requirements  of  the  poorer  classes. 
It  will  seek  to  extend  to  them  the  blessings  of  life  insurance,  by 
accepting  weekly  instead  of  quarterly,  semi-annual  and  yearly 
payments  of  premiums,  and  by  conforming  all  its  plans,  methods 
and  practices  to  the  necessities,  wants  and  abilities  of  the  indi- 
gent and  laboring  portion  of  the  community. ' ' 

This  effort,  also,  seems  not  to  have  been  carried  beyond  the 
preliminary  steps,  and  I  find  no  record  of  the  Industrial  Life 
ever  having  had  a  corporate  existence.  Mr.  Beers,  as  Vice- 
President  of  the  New  York  Life,  had  no  doubt  become  familiar 
with  the  English  system  of  Industrial  insurance,  but,  for  reasons 
which  can  not  now  even  be  guessed  at,  the  project  fell  through, 
and  the  Industrial  Life  of  1868  never  had  more  than  a  paper  ex- 
istence. The  effort,  however,  was  a  step  in  the  right  direction, 
and  at  the  time  seems  to  have  attracted  considerable  attention. 

Thus,  in  the  Exchange  and  Review  for  November,  1868,  there 
appeared  an  article  on  ' '  Industrial  Insurance ' '  from  which  I  also 


INDUSTRIAL   INSURANCE   BEFORE    1874.  23 

make  a  brief  extract :  "The  adaptation  of  life  insurance  to  the 
circumstances  of  the  working  classes  is  an  idea  whose  practical 
and  true  development  in  the  United  States  is  yet  in  embryo.  In 
England  it  has  received  more  attention,  but  it  is  there  beset  with 
the  drawbacks  which  seem  inevitable  to  all  projects  having  for 
their  proposed  object  the  bettering  of  the  financial  condition  of  the 
great  masses.  *  *  *  *  Without  doubt,  the  penny  of  the  poor  man 
is  to  have  its  place  in  life  insurance  accumulation  as  well  as  the 
dollar  of  the  capitalist,  but  it  behooves  all  concerned  to  watch 
that  sharpers  do  not  divert  the  tendency  of  the  hour  in  this  re- 
spect to  their  own  benefit."  In  explanation  of  its  attitude  of 
caution,  the  Exchange  and  Review  added  the  statement  that 
"A  lyondon  journal,  in  an  exposition  of  the  frauds  which 
have,  under  the  name  of  industrial  assurance  societies,  so  exten- 
sively swindled  the  poorer  classes  of  England,  remarks :  '  In- 
dustrial, like  the  higher  kinds  of  life  insurance,  can  not  be  man- 
aged properly  except  upon  purely  scientific  principles.  *  *  *  * 
This  is  the  manner  in  which  the  Prudential  and  one  or  two 
other  offices  have  proceeded,  and  which  now  stand  out  promi- 
nently as  the  leading  industrial  assurance  companies,  presenting 
a  marked  contrast  to  the  miserable  creations  of  the  illiterate 
adventurers.'  ' 

We  have  here  a  clear  and  concise  recognition  not  only  of  the 
public  demand  for  Industrial  insurance  on  the  plan  of  the  Pru- 
dential of  England,  but  a  word  of  caution  against  the  fraudulent 
and  ruinous  methods  employed  by  co-operative  and  other  forms 
of  pseudo-insurance  associations  having  for  their  principal 
object  the  rapid  enrichment  of  their  promoters.  It  was  just  such 
advice  as  this,  based  on  a  sound  knowledge  of  insurance  princi- 
ples, that  was  needed  at  this  period  to  keep  the  ill-informed, 
though  perhaps  of  honest  intent,  from  entering  upon  an  enter- 
prise in  which  failure  on  a  large  scale  would  have  done  incalcu- 
lable harm  to  the  cause  of  legitimate  life  insurance  for  the  indus- 
trial population  of  the  United  States. 

That  the  subject  was  now  attracting  considerable  attention 
among  the  intelligent  and  well  informed  is  apparent  in  the 
increasing  number  of  articles  upon  the  subject  in  the  insur- 
ance journals  of  the  period.  In  the  Insurance  Times  for  1869, 
Mr.  J.  F.  Entz,  one  time  Actuary  of  the  New  York  Life  Insur- 
ance and  Trust  Company,  in  a  long  and  able  article  discussed 
the  subject  as  follows:  "With  all  the  noble  and  widespread 


24  HISTORY   OF  THE   PRUDENTIAL. 

benefits  which  life  insurance  confers  upon  society,  it  must  be 
acknowledged  that  it  falls  lamentably  short  in  one  quarter,  and 
that  in  a  quarter  where  its  ministrations  are  most  needed  ;  we 
mean  among  the  poorer  classes.  Notwithstanding  the  immense 
progress  of  life  insurance  in  this  country  during  the  last  twenty 
years,  we  are  ignorant  of  many  features  practised  with  great 
success  in  England,  France  and  Germany.  These  improvements 
are  mostly  toward  the  end  of  opening  the  doors  to  the  masses  of 
the  middle  and  laboring  classes,  and  every  well-wisher  of  his  fel- 
low-citizens who  has  influence  among  our  insurance  companies 
should  interest  himself  in  their  speedy  introduction  in  the  United 
States." 

Mr.  Entz  fully  recognized,  as  one  of  the  most  important 
steps  in  this  direction,  that  "  every  facility  should  be^  extended  in 
the  mode  of  paying  premiums"  but  he  also  recognized  another 
factor  of  most  importance  in  the  extension  of  insurance  princi- 
ples to  the  masses,  and  that  was  the  need  of  insurance  for  every 
member  of  the  family.  In  other  words,  family  insurance  on  the 
Industrial  plan,  as  practiced  by  the  British  Prudential  since  1854. 
In  reference  to  this  part  of  his  subject  Mr.  Entz  stated  that 
"Burial  societies  have  existed  for  many  years  in  this  country, 
but  they  have  hitherto  been  defective  in  two  points,  "  namely, 
' '  all  members  were  assessed  alike  without  regard  to  age ;  sec- 
ondly, they  have  not  extended  the  benefit  of  the  subscriber's  risk 
to  every  member  of  the  family." 

By  1870  two  of  the  essential  principles  of  Industrial  insur- 
ance had  been  recognized  by  influential  writers  on  insurance, 
namely,  the  weekly-payment  principle  and  the  principle  of  family 
insurance  ;  and  it  only  remained  for  those  who  contemplated  the 
practical  inauguration  of  Industrial  insurance  in  the  United  States 
to  recognize  with  equal  clearness  the  necessity  of  the  collector 
and  the  adjustment  of  the  amounts  of  insurance  to  the  premium 
as  a  unit  of  five  cents,  or  multiples  thereof. 

Mr.  Entz  in  1 870  had  made  an  attempt  to  carry  his  ideas  into 
practical  execution,  and  organized  that  year  The  Progress  L,ife  and 
Savings  Insurance  Company  of  the  United  States,  but,  for  reasons 
which  can  not  here  be  discussed,  the  project  was  never  carried  into 
actual  operation,  and  in  some  respects  this  was  fortunate,  since, 
as  has  previously  been  pointed  out,  failure  of  any  honest  attempt 
to  promote  savings  or  insurance  on  a  large  scale  would  have 
been  disastrous  to  the  cause  of  legitimate  life  insurance  for  the 


INDUSTRIAL  INSURANCE  BEFORE    1874.  25 

industrial  population.  The  rather  curious  and  interesting  com- 
bination of  the  principle  of  savings  with  the  principle  of  insur- 
ance has  previously  been  referred  to,  but  it  can  not  be  too  often 
pointed  out  that  savings  banks  and  life-insurance  companies  each 
have  their  distinct  position  in  the  domain  of  thrift  and  social 
progress,  and  they  can  never  be  combined  to  successfully  accom- 
plish the  same  purpose.  Savings  banks  by  1870  had,  it  is  true, 
reached  a  very  important  position,  but  it  was  far  from  being  true 
that  savings  habits  among  the  masses  had  been  extensively  devel- 
oped. Careful  investigations  made  into  the  subject  by  qualified 
investigators,  especially  in  Massachusetts  by  the  Commissioner 
of  Labor,*  had  demonstrated,  first,  that  only  a  little  more  than 
one-half  of  the  depositors  at  that  time  really  belonged  to  the 
wage-earning  classes ;  second,  that  the  average  number  of  de- 
posits made  per  annum  by  a  depositor  was  small,  and  in  Massa- 
chusetts savings  banks  was  only  two  and  a  half  deposits  for  each 
depositor.  The  latter  fact  is  of  much  importance  in  that  it  shows 
that  systematic  weekly  savings  had  not  yet  gained  a  firm  footing 
among  the  industrial  wage-earners  of  Massachusetts,  and  the 
Labor  Commissioner  supports  this  conclusion  by  the  emphatic 
statement  that  ' '  Our  investigations  into  the  earnings  and  cost  of 
living  of  wage-laborers,  the  results  of  which  were  given  in  two 
previous  reports,  convinced  us  that  savings  are  the  exception  and 
not  the  rule.  To  reconcile  this  fact  with  the  general  statement 
that  the  hundreds  of  millions  of  dollars  now  on  deposit  in  our 
Savings  Institutions  are  the  savings  of  the  wage-laborer,  is  im- 
possible." This  assertion  was  not  new  to  those  familiar  with  the 
official  reports  of  the  Savings  Banks  Commission,  who  as  far  back 
as  1852  had  stated  that  "persons  who  are  regarded  as  wealthy 
make  deposits  in  Savings  Banks  to  the  extent  of  the  legal 
limits,"  and  in  1870  Governor  Claflin  repeated  this  statement  in 
the  words  that  ' '  These  institutions  are  becoming  still  more  the 
favorite  places  of  deposit,  not  only  for  persons  of  small  means,  but 
also  for  those  seeking  investment  for  very  considerable  sums. 
The  prudent  management  of  those  banks  has  met  its  reward  in 
gaining  the  confidence  of  the  public  to  such  a  degree  that  even 
the  capitalists  use  them  as  places  of  investment. ' '  To  these  em- 
phatic and  unqualified  statements  I  may  add  the  following  extract 
from  the  Governor's  message  for  1871  :  "It  is  very  evident  that 

*  Third  Mass.  Labor  Report,  p.  293  et  seq. 


26  HISTORY  OF  THE   PRUDENTIAL. 

a  large  share  of  this  increase  is  not  the  saving  of  labor.  Each 
year  shows  more  deposits  by  capitalists."  From  such  evidence 
it  is  quite  plain  that  by  1870  a  very  considerable  proportion  in 
number  and  a  much  more  considerable  proportion  in  amount  of 
the  savings-banks  deposits  were  those  of  the  well-to-do,  rather 
than  those  of  the  industrial  or  wage-earning  masses. 

The"-facts  for  Massachusetts  would  seem  fully  to  warrant  the 
following  conclusions  :  first,  that  by  1870  the  considerable  in- 
crease in  the  amount  of  deposits  was  largely  due  to  the  rapid 
accumulations  of  the  wealthy,  who  made  extensive  use  of  the 
banks  at  this  period  ;  second,  the  proportion  of  the  depositors  who 
were  actually  wage-earners  was  only  58  per  cent.  ;  third,  the 
average  number  of  deposits  per  annum  and  per  depositor  was 
only  two  and  a  half,  which  would  absolutely  prove  that  the 
habit  of  systematic  weekly  or  even  monthly  saving  had  not  yet 
been  developed  among  the  industrial  masses  of  Massachusetts, 
and  probably  not  in  other  parts  of  the  country.  Finally,  it  was 
shown,  by  investigations  made  at  this  period,  that  the  foreign- 
born  population,  most  in  need  of  a  small  fund  for  unforeseen 
contingencies,  had  not  yet  learned  to  make  extensive  use  of  the 
banks.  It  remained  for  Industrial  insurance,  by  its  system  of 
weekly-premium  payments,  to  largely  develop  the  habit  of  sys- 
tematic savings  which  has  done  much,  if  not  most,  to  materially 
increase  the  general  welfare  of  the  industrial  population. 

What  was  true  of  savings  habits  in  the  use  made  of  savings 
banks  was  equally  true  of  savings  habits  in  the  use  made  of  Ordi- 
nary life  companies  by  the  wage-earning  population.  Attacks  on 
the  whole  system  of  life  insurance  "  as  one  of  robbery  and  fraud  " 
were  made  editorially  in  the  New  York  Tribune  in  1869,  while 
other  newspapers  with  equal  emphasis  condemned  the  entire 
system  of  life  insurance,  much  to  the  detriment  of  the  prog- 
ress of  the  insurance  idea  among  the  masses.  Still  the  ques- 
tion of  providing  life  insurance  for  the  industrial  population 
continued  to  receive  occasional  attention,  though  only  in  a  half- 
hearted manner.  Evidently,  many  of  those  who  most  seriously 
considered  the  problem,  being  confronted  by  the  rising  tide  of 
co-operative  insurance,  combined  with  the  hostilities  of  leading 
newspapers  and  of  men  of  influence  to  the  entire  system  of  level- 
premium  insurance,  considered  the  task  of  establishing  safe 
insurance  on  the  principle  of  absolute  security,  in  the  face  of 


INDUSTRIAL   INSURANCE   BEFORE    1874.  27 

the  demand  for  cheap  insurance,  or  pseudo-insurance,  a  hope- 
less one. 

"  Life  insurance,"  in  the  words  of  Mr.  D.  N.  Holway,  "  is  a 
purely  scientific  financial  procedure.  It  guesses  at  nothing." 
On  the  other  hand,  co-operative  insurance,  so-called,  was  a  pro- 
cedure in  defiance  of  all  principles  of  sound  finance,  and  a  guess 
at  everything,  including  the  rate  of  human  mortality,  on  which 
the  charges  or  dues  were  supposed  to  be  based.  Hence,  with  the 
latter  it  was  only  a  question  of  time  when  the  inevitable  crash 
would  have  to  take  place.  Owing  to  a  large  variety  of  causes 
favoring  the  growth  of  co-operative  insurance,  the  end  was  put 
off  much  longer  than  would  have  been  the  case  under  normal 
conditions.  Still,  in  the  words  of  the  Exchange  and  Review,  the 
co-operative  movement,  and  similar  attempts  at  life  insurance 
by  organizations  or  trade  societies,  were  not  "without  signs 
of  good,  despite  the  abnormal  forms  which  they  are  assuming. 
They  reveal  a  growing  interest  in  life  insurance  among  masses 
who  have  not  yet  embraced  its  provisions."  And  as  one  of  the 
possible  solutions  of  the  problem  the  Exchange  and  Review 
(1869)  suggested  that  "Unions  for  effecting  life  insurance  with 
the  companies,  and  under  special  arrangements,  may  be  a  part 
of  the  programme  of  the  future  unions  which  may  make  indi- 
vidual insurance  certain  and  more  available.  *  *  #  * 
Cultivating  the  habit  and  practice  of  life  insurance,  they 
may  make  it  less  apart  from  the  practical  consideration  of  the 
people." 

In  explanation  of  these  unions  for  effecting  life  insurance 
with  the  companies,  which,  in  a  measure,  were  rather  peculiar 
attempts  for  an  alliance  of  trade  associations  and  others  with  the 
regular  life-insurance  companies  for  the  purpose  of  providing  life 
insurance  for  the  members,  the  Exchange  and  Review  refers  to 
one  such  experiment  as  follows  :  '  *  The  New  York  Life  Insurance 
Company  has  made  a  proposition  of  this  kind  to  the  Working- 
men's  Union  [previously  referred  to] .  *  *  *  *  The  prop- 
osition was  to  insure  not  less  than  1,000  workingmen  of  the 
various  trade  unions,  issuing  1,000  policies  at  a  premium  of  50 
cents  a  week  each."  The  attempt  seems  to  have  failed  on 
account  of  the  opposition  on  the  part  of  some  members  of  the 
trade  unions,  who  were  opposed  to  life  insurance  on  any  terms. 
The  most  important  fact  is  the  weekly -premium  stipulation,  and, 


28  HISTORY   OF  THE   PRUDENTIAL. 

while  still  far  from  being  in  the  nature  of  Industrial  insurance, 
we  have  here  a  form  of  workingmen's  insurance  tending  dis- 
tinctly in  the  direction  of  what,  in  course  of  time,  became  known 
as  life  insurance  on  the  Industrial  plan. 

A  somewhat  similar  arrangement  was  effected  at  about  this 
time  by  the  Metropolitan  Life  Insurance  Company  of  New  York, 
which  insured  the  members  of  a  German  organization,  the 
Hildise  Bund,  of  Cincinnati,  Ohio,  and  in  an  historical  sketch  of 
the  company  it  is  stated  that  "In  the  year  1869  and  for  many 
years  thereafter  the  Company  did  a  large  business  on  the  weekly- 
payment  plan."*  The  agreement  of  the  company  with  the 
Hildise  Bund  was  ' '  to  insure  the  lives  of  those  who  want  to 
become  members,  if  the  risks  are  acceptable  to  the  company,  and 
charge  therefor  the  regular  rates.  The  Hildise  Bund,  which  is  a 
chartered  institution,  is  charged  for,  and  pays  to  the  company  the 
regular  quarterly  premium,  and  collects  by  its  own  treasurer  the 
weekly  dues  from  the  members.  No  matter  how  these  weekly 
dues  are  fixed,  the  Metropolitan  never  receives  more  nor  less  than 
the  regular  premium."  It  is  clear,  from  official  correspondence 
published  in  the  Spectator^  that  the  company  itself  did  not  transact 
a  weekly -payment  business,  but  that  the  Bund  paid  to  the  com- 
pany the  quarterly  premiums  collected  weekly  from  the  members, 
and  that,  strictly  speaking,  the  company  itself  did  not  transact  a 
weekly-payment  business  at  this  period. 

On  a  plan  somewhat  similar  to  the  method  of  the  Metro- 
politan, the  New  York  Life  Insurance  Company  in  1870  organized 
a  society  by  the  name  of  The  Fortuna  Life  Insurance  Society,  as 
a  branch  of  the  New  York  Life,  though  as  a  separate  organiza- 
tion, having  for  its  object  the  insuring  of  the  middle  classes  and 
receiving  the  premiums  in  weekly  instalments.  The  society 
issued  all  the  ordinary  kinds  of  policies  from  $500  to  $20,000, 
and  the  plan  was  especially  designed  to  bring  life  insurance  within 
the  reach  of  the  working  population,  and  accommodate  those 
who  could  best  afford  to  pay  their  premiums  on  the  weekly- 
payment  plan.  Whether  this  society  ever  actually  transacted 
business  does  not  appear  from  a  careful  examination  of  the 
history  of  the  company  published  in  1895. 

*  Souvenir  Bulletin,  p.  10. 
t  Spectator,  1871,  p.  352. 


INDUSTRIAL   INSURANCE   BEFORE    1874.  29 

Another  level-premium  company  which  attempted  a  some- 
what similar  plan  was  the  Western  New  York  Life,  of  Batavia, 
N.  Y.,  which,  through  the  Familien  Schutz,  transacted  a  business 
practically  identical  with  the  arrangement  of  the  Metropolitan 
with  the  Hildise  Bund  ;  and,  as  far  as  it  is  possible  to  judge,  the 
Western  New  York  Life  Company  also  used  the  other  concern 
simply  as  a  soliciting  and  collecting  agency.  It  was  stated  at 
the  time  that  the  Familien  Schutz  had  been  organized  for  the 
purpose  of  insuring  its  members  against  sickness  and  death  by 
the  payment  of  small  weekly  premiums,  and  by  an  agreement 
between  the  society  and  the  company  the  latter  was  to  receive 
the  premiums  collected  by  the  former,  and  insure  its  members  at 
the  regular  life  rates,  and  otherwise  aid  in  sustaining  the  society. 
The  plan  was  stated  to  have  been  popular  among  the  German 
population,  and  a  considerable  number  of  members  seem  to 
have  been  obtained  in  different  States. 

Still  another  society  on  this  order  was  the  Bund  ' '  Hilfin- 
noth,"  or  New  York  "Help  in  Need"  society,  an  organization 
having  also  for  its  object  "  the  insurance  of  workingmen  whose 
weekly  incomes  seldom  furnish  accumulation  of  sufficient  size 
for  the  payment  of  annual  or  semi-annual  premiums  on  life 
policies."  The  insurance  through  this  Bund  was  furnished  by 
the  New  York  Life  Insurance  Company,  but  later,  in  1875,  by 
the  German  Department  of  the  Life  Association  of  America. 
Very  probably  the  New  York  Life  Insurance  Company  found 
the  experiment  an  unprofitable  one  and  turned  the  business 
over  to  the  Life  Association  of  America,  which  company  failed 
in  1878. 

Gradually,  however,  the  light  was  breaking,  and  the  problem, 
of  genuine  workingmen' s  insurance  was  being  brought  to  the 
attention  of  the  public  with  an  ever-increasing  degree  of 
emphasis  and  force.  The  impending  failure  of  the  International 
Life  of  London,  and  the  reinsurance  of  its  American  business, 
had  drawn  public  attention  to  the  Prudential  of  London,  which 
company  had  assumed  some  of  the  outstanding  risks  of  the 
International.  The  controversy  was  referred  to  at  length  in  the 
Massachusetts  insurance  reports,  and,  as  a  coincident  matter, 
public  attention  was  once  more  directed  to  the  great  success  of 
the  Prudential  Assurance  Company.  Another  most  important 
factor  was  the  publication  of  a  paper  by  Mr.  (now  Sir)  Henry 


30  HISTORY   OF   THE   PRUDENTIAL. 

Harben  on  the  history  of  the  Prudential,  read  before  the  Institute 
of  Actuaries  of  England,  on  April  24,  1871.  The  paper  itself, 
and  the  learned  discussion  thereon  by  the  foremost  men  of 
actuarial  science  of  the  time,  attracted  sufficient  attention  in  the 
United  States  to  induce  a  number  of  influential  insurance  journals 
to  discuss  the  subject  of  workingmen's  insurance  on  the  Indus- 
trial plan  from  a  new  standpoint,  and  among  the  first  to  give 
considerable  space  to  the  new  views  regarding  Industrial  insur- 
ance was  the  Spectator ',  which  in  its  October  issue  for  1871  devoted 
considerable  space  to  the  system  of  Industrial  insurance  as  prac- 
ticed by  the  London  Prudential.  I  quote  from  the  Spectator  as 
follows  : — 

"  How  far,  if  at  all,  the  English  plan  of  industrial  insurance 
is  susceptible  of  application  and  development  in  this  country 
must  be  a  question  for  actuaries  and  managers  to  decide.  That 
there  are  features  of  the  system  which  commend  it  to  the  accept- 
ance of  certain  classes  in  the  community,  here  as  there,  does  not 
admit  of  doubt.  But  the  reduction  of  these  to  practical  use  among 
us  is  a  problem  whose  solution  may  not  be  very  easy  and  must 
be  a  work  of  considerable  time." 

As  to  the  Prudential  the  Spectator  further  said  :  ' '  As  we 
showed  in  the  June  number  of  the  Spectator,  the  Prudential  has 
attracted  to  itself  and  its  system  the  attention  of  life  managers 
everywhere,  by  reason  of  its  immense  volume  of  business  and 
the  systematic  manner  in  which  infinite  details  are  kept  well  in 
hand.  And  the  paper  read  by  Mr.  Harben  before  the  Institute  of 
Actuaries,  some  months  ago,  has  brought  the  subject  of  industrial 
insurance  so  graphically  and  prominently  into  notice,  as  to  indi- 
cate not  only  a  new  sensation,  but  a  new  departure  in  life  insur- 
ance. ' ' 

That  this  new  departure  would,  therefore,  attract  considerable 
attention  in  this  country,  and  that  there  would  be  developed  a 
local  demand  for  some  such  institution  in  this  country,  which 
would  both  be  convenient  as  to  the  premium  payments  and  abso- 
lutely secure  as  to  the  payment  of  claims,  was  only  a  question  of 
time.  Inquiries,  no  doubt,  were  made  during  these  years  directly 
to  the  Prudential  of  London,  for  facts  and  information  pertaining 
to  the  business,  and  it  is  on  record  in  Mr.  Harben' s  own  words  to 
the  Royal  Commission  on  Friendly  Societies  in  1872  that  "in 
America  they  want  to  adopt  the  Industrial  system  of  insurance, 


INDUSTRIAL   INSURANCE   BEFORE    1874.  31 

and  I  myself  have  framed  an  Act  with  all  the  necessary  schedules 
for  them  for  the  purpose. ' '  * 

By  June,  1872,  the  Prudential  of  London  had  812,000 
policies  in  force  on  the  Industrial  plan  and  11,000  policies  on  the 
Ordinary  plan  of  life  insurance.  In  the  whole  history  of  life 
insurance  no  such  result  had  ever  before  been  accomplished,  and 
well  could  the  Spectator  say  of  Mr.  Harben,  the  master-mind  of 
the  Prudential,  that  "It  is  very  obvious  that  Mr.  Harben,  the 
Superintendent  of  this  colossal  business,  must  be  a  man  of 
remarkable  organizing  and  administrative  talent,"  and  that  "  the 
Prudential  is  doing,  upon  wholesale  principles,  the  most  extensive 
retail  life  insurance  business  ever  undertaken.  But  the  results  are 
certainly  remarkable,  and,  thus  far,  they  appear  to  bear  the  stamp 
of  entire  success." 

It  remained  for  the  Insurance  Times  to  make  itself  the  first  pro- 
nounced and  energetic  advocate  of  the  establishment  of  Industrial 
insurance  in  the  United  States.  To  the  Insurance  Times,  and  to 
its  gifted  editor,  Stephen  English,  belongs  the  credit  for  having 
first  placed  the  general  facts  pertaining  to  the  practice  of  Indus- 
trial insurance  before  the  insurance  managers  of  the  United  States. 
From  April,  1872,  the  Insurance  Times  never  ceased  dealing  at 
length  with  the  subject  month  after  month  ;  page  after  page  was 
devoted  to  Industrial  insurance,  and  in  the  whole  history  of  life 
or  any  other  kind  of  insurance  there  is  not  another  instance  of  a 
similar  propaganda  in  behalf  of  a  "new  departure"  destined  in 
time  to  become  the  greatest  business  success  of  the  age. 

In  the  July  number  of  the  Insurance  Times  the  ' '  Irish  Cor- 
respondent"  of  that  paper,  in  a  long  and  interesting  communi- 
cation stated  that  he  had  learned  from  various  sources  that  the 
subject  of  Industrial  insurance,  as  set  forth  in  the  recent  issues 
of  the  Times,  was  attracting  considerable  attention  among  the 
companies  in  the  United  States,  and  that  he  had  been  informed 
by  the  Secretary  of  the  Victoria  Assurance  Society  that  Ameri- 
can companies  were  in  direct  communication  with  him  on  the 
subject,  while  "Mr.  Harben  has  been  applied  to  for  all  the 
papers  of  the  Prudential ' ' ;  hence  the  conclusion  that  ' '  You 
may,  therefore,  look  out,  I  think,  for  another  good  result  to 
American  life  insurance,  arising  from  the  facts  and  advocacy  of  the 
'  Industrial '  business  in  your  journal.  I  am  mistaken,  or  some  of 

*  Third  Report,  Q.  26,125. 


32  HISTORY   OF  THE   PRUDENTIAL. 

your  New  York  companies  mean  to  adopt  the  industrial  system  of 
monthly-premium  payments." 

It  was,  however,  an  error  on  the  part  of  the  Times  corre- 
spondent to  speak  of  insurance  on  the  monthly-payment  plan  as 
Industrial  insurance.  It  can  not  be  too  often  pointed  out  that 
Industrial  insurance  recognizes  as  two  of  its  elementary  principles 
that  the  premiums  must  be  paid  weekly  and  be  collected  from 
the  houses  of  the  insured  ;  but  for  some  curious  reason  the  Insur- 
ance Times,  in  its  early  advocacy  of  the  cause  of  Industrial 
insurance  in  the  United  States,  advocated  the  monthly-premium 
payment  plan  rather  than  the  Prudential  system  of  Industrial 
insurance  on  the  weekly-premium  payment  plan. 

The  increasing  demand  for  workingmen's  insurance  on  the 
Industrial  plan  is  partly  explained  by  the  excessive  mortality, 
affecting  all  age  periods,  which  prevailed  in  the  large  cities,  and  es- 
pecially in  New  York  and  Newark  at  this  particular  time.  The 
general  death-rate  of  New  York  City,  which  had  been  exceed- 
ingly high  during  1870  and  1871,  having  been  27.9  and  28.2  per 
1,000,  respectively,  had  increased  to  33.0  per  1,000  of  population 
during  1872.  At  the  younger  ages  the  mortality  in  1872  was,  in 
some  instances,  more  than  50  per  cent,  in  excess  of  the  mortality 
for  the  previous  year.  The  Insurance  Times,  commenting  at 
length  on  the  excessive  mortality  of  children,  discussed  the  prob- 
lem of  child-life  waste  from  various  standpoints,  advancing  the 
conclusion  that  a  very  large  amount  of  infant  mortality  was  from 
preventable  causes,  especially  malnutrition  due  to  artificial  feed- 
ing, the  habit  of  drugging  with  patent  preparations,  and  the 
general  unsanitary  condition  of  the  dwellings.  Unquestionably, 
New  York  City  at  this  time  was  not  a  very  healthy  place  to 
live  in. 

Under  such  conditions  life  insurance  for  the  whole  family 
was  becoming  an  almost  absolute  necessity.  Nothing  remained 
in  many  cases  but  pauper  support  during  the  last  illness  and 
pauper  funerals  for  the  dead.  Pauper  funerals  in  New  York 
City,  which  had  numbered  2,897  *n  l87°>  nad  increased  to 
3,502  in  1871,  increasing  still  further  to  4,086  in  1872 — a  point 
which  was  not  reached  again  until  1891,  when  the  population 
had  almost  doubled  itself.  While,  no  doubt,  much  relief  was 
afforded  by  such  of  the  aid  societies  as  were  temporarily  in 
a  solvent  condition,  these  confined  their  burial  assistance  to 
adults,  while  the  burial  of  children  was  practically  unprovided 


INDUSTRIAL  INSURANCE   BEFORE    1874.  33 

for ;  and  nothing  was  more  natural  than  that,  during  such  a 
period  of  distress,  a  considerable  amount  of  attention  should  be 
given  to  a  system  of  insurance  which,  in  Kn gland,  had  accom- 
plished so  vast  an  amount  of  good,  and  had  done  much,  and  was 
tending  to  do  more,  towards  improving  the  condition  of  life  of 
the  industrial  population. 

The  practical  results  of  Industrial  insurance  in  England 
were  of  course  familiar  to  many  English  emigrants  who  had 
come  to  this  country  during  the  past  twenty  years,  and  who, 
either  as  members  of  Friendly  Societies,  of  Trading  Collecting 
Societies,  or  of  the  Industrial  insurance  companies,  had  carried 
to  this  country  considerable  information  of  the  actual  results 
accomplished  by  family  insurance  in  the  old  country. 

Another  element  making  distinctly  for  an  increasing  interest 
in  this  form  of  insurance  was  the  increasing  public  dissatisfaction 
with  the  existing  forms  of  co-operative  or  other  kinds  of  pseudo 
life  insurance.  While  new  organizations  were  being  constantly 
organized,  and  while  new  movements  were  constantly  set  on 
foot,  now  for  purely  speculative  reasons,  now  for  secret-society 
purposes,  or  again  for  trade-society  objects,  all  such  move- 
ments ultimately  proved  disastrous  experiences  along  the  now 
well-recognized  road  which  inevitably  leads  to  insolvency  and 
ruin. 

The  frequency  of  failure  among  these  numerous  societies  or 
associations  granting  sick  benefits  and  promising  sums  payable 
at  death  attracted  the  attention  of  Insurance  Commissioners  in 
nearly  all  the  States  of  the  Union.  Hardly  an  official  report  was 
issued  by  a  State  official  in  charge  of  insurance  matters  but  atten- 
tion was  called  to  the  increasing  danger  of  a  great  public  loss 
and  subsequent  calamity  resulting  from  the  ill-advised  schemes 
under  the  name  of  co-operative  life  insurance.  Thus,  in  the 
report  of  the  Missouri  Superintendent  of  Insurance  for  1872, 
reference  is  made  to  the  delusive  plan  of  co-operative  life  in- 
surance as  one  demanding  some  action  by  the  legislature,  and 
the  words  of  warning  concluded  with  the  remark  that  "They 
are  mentioned  again  because  in  the  West  this  form  of  insurance 
is  making  headway,  seriously  to  the  detriment  of  the  public 
good." 

The  time  for  establishing  an  Industrial  insurance  company 
in  the  United  States  had,  however,  not  yet  arrived  in  1872.  The 
fundamental  principle  underlying  Industrial  insurance,  as  well 


34  HISTORY  OF  THE   PRUDENTIAL. 

as  all  other  legitimate  forms  of  life  insurance,  is  that  the  first 
and  most  essential  element  of  insurance  is  safety  ;  *  but  at  this 
period  of  insurance  history  the  masses  had  not  yet  realized 
that  so-called  "cheap"  insurance,  or  "insurance  at  cost,"  as 
transacted  by  men  ignorant  of  the  principles  and  practice  of 
the  business,  could  prove  only  a  delusion  and  a  snare.  Time 
only  could  remedy  these  evils  and  replace  worthless  institutions 
by  worthy  ones.  It  was  as  yet  too  early  to  establish  a  com- 
pany solely  on  business  principles,  offering  insurance  as  a  matter 
of  contract,  without  any  pretense  of  a  pseudo-philanthropy ; 
for  there  was  still  a  belief  that  somehow,  some  way,  the 
magic  word  " co-operation"  would  solve  a  problem  which,  for 
its  true  solution,  required  exceptional  ability,  courage,  patience 
and  unremitting  toil,  devoted  to  the  achievement  of  a  single 
purpose. 

The  Insurance  Times  continued  its  efforts  in  behalf  of  the 
dissemination  of  information  in  the  United  States  as  to  the  value 
and  importance  of  the  English  method  of  Industrial  insurance. 
Unquestionably,  the  current  hearings,  or  taking  of  evidence,  before 
the  Royal  Commission  on  Friendly  Societies  (1871-' 74)  had  much 
to  do  with  the  growth  of  an  American  sentiment  in  favor  of 
insurance  for  the  masses  on  the  plan  of  family  insurance,  so  suc- 
cessfully developed  by  the  British  Prudential.  Mr.  Harben's 
testimony  given  in  1872,  no  doubt,  had  come  to  the  notice  of 
American  insurance  managers  ;  and  while  there  remains  no  trace 
of  an  effort  to  establish  an  Industrial  insurance  company  during 
1872,  there  is  evidence  of  such  an  attempt  having  been  made  in 
Columbus,  Ohio,  during  the  early  part  of  the  following  year, 
where,  according  to  the  hisurance  Times  of  February,  1873,  the 
"  Prudential  Life  Insurance  Company,  with  a  capital  of  $200,000," 
was  in  progress  of  organization.  This  proposed  company,  how- 
ever, seems  never  to  have  come  into  a  corporate  existence — 
at  least,  there  is  no  record,  in  the  report  of  the  Insurance  Depart- 
ment for  that  year,  of  such  a  company  ever  having  been  incor- 
porated in  Ohio. 

In  its  March  issue  for  1873  the  Insurance  Times  discussed 
some  of  the  evidence  given  before  the  Royal  Commission,  and 


*  Life  insurance  has  properly  been  defined  as  "a  present  means  of 
obtaining  a  certain  advantage  over  an  uncertain  event." 


INDUSTRIAL   INSURANCE   BEFORE    1874.  35 

restated  its  former  position  in  favor  of  Industrial  insurance  for 
the  American  industrial  masses,  as  follows  : — 

"  The  very  first  new  L,ife  Insurance  Company  that  ought  to 
be  established  in  the  United  States  should  be  one  of  this  class — for 
Industrial  business.  The  field  is  open  to  be  worked  to  an  unlim- 
ited extent.  It  would  be  found  to  be  one  of  the  most  successful 
fields  ever  cultivated  for  L,ife  Insurance  in  this  country." 

While  practical  minds,  familiar  with  insurance  matters,  were 
thus  considering  the  question  of  workingmen's  insurance  from  a 
standpoint  of  fact  and  expediency,  at  least  one  of  the  leading 
economists  of  the  period,  Mr.  Amasa  Walker,  advanced  arguments 
in  favor  of  government  life  insurance,  on  the  ground  that  "the 
State  is  bound  to  afford  protection  to  the  lives  and  property  of 
its  citizens,  arid  any  act  on  its  part  necessary  to  the  full  realiza- 
tion of  this  great  object  is  not  only  right  and  proper,  but  obliga- 
tory ";  and,  in  Virginia,  it  was  Mr.  Henry  A.  Wise  who,  in  his 
gubernatorial  campaign,  announced  himself  unconditionally  in 
favor  of  life  insurance  by  the  State.  He  advocated  such  a 
course,  not  because  it  was  likely  that  the  State  would  offer 
superior  plans  of  insurance  at  lower  rates  than  those  charged 
by  private  companies,  but  because  the  State  was  in  a  bank- 
rupt condition,  and  he  had  hopes  that  the  government  would 
thus  be  able,  by  the  means  of  life-insurance  profits,  to  "  recruit 
its  exhausted  or  insufficient  resources."  The  Insurance  Times 
properly  explained  that  life  insurance  was  the  last  thing  in  the 
world  that  an  unsettled  government  should  indulge  in,  and  it  is 
much  to  the  credit  of  the  Legislature  of  Virginia  that  they  ' '  were 
not  to  be  deluded  by  the  specious  aspects  of  the  bill  presented  for 
the  incorporation  of  the  scheme,  and  very  prudently  laid  it  in  the 
limbo  of  countless  similar  visionary  plans  for  ameliorating  the 
condition  of  the  human  race." 

That  there  was  a  local  demand  in  Virginia  for  the  extension 
of  the  principles  of  life  insurance  to  the  masses  is  illustrated  by 
a  peculiar  experiment  in  insurance  attempted  at  the  same  time 
that  the  question  of  insurance  by  the  government  was  seriously 
under  discussion.  Quoting  from  the  New  York  Evening  Mail  of 
1873,  Cornelius  Walford,  in  the  Insurance  Cyclopedia  (Vol.  V., 
p.  165),  states  that  a  Richmond  (Va.)  newspaper  during  this  year 
advertised  the  Undertakers  and  Burial  Insurance  Company, 
which  offered  ' '  to  agree  to  furnish  promptly  to  all  persons  in  good 
health,  under  forty  years  of  age,  for  $i  per  annum,"  the  insurance 


36  HISTORY   OF  THE   PRUDENTIAL. 

"  needful  for  a  funeral."  For  some  reason  or  other  this  experi- 
ment, which  in  later  years  was  frequently  repeated,  seems,  then 
as  now,  to  have  fallen  short  of  success. 

Still  another  form  of  life  insurance  for  the  masses  had  been 
devised  by  the  Hon.  Emerson  W.  Keyes,  the  author  of  a  work 
on  the  history  of  savings  banks  and  one  of  the  directors  of  the 
American  Popular  Life,  to  whose  weekly-payment  plan  previous 
reference  has  been  made.  The  plan  of  Mr.  Keyes  was  a  combi- 
nation of  the  principles  of  life  insurance  and  the  methods  of 
savings  banks,  and  had,  in  the  words  of  the  editor  of  the 
Monitor  (1873),  "sound  sense  and  reason  to  commend  it "  ;  but,  as 
a  matter  of  fact,  as  a  form  of  family  insurance  the  method  was 
faulty  and  useless  for  the  purpose  of  family  protection,  since  it  was 
practically  nothing  but  term  insurance,  providing  life  insurance 
for  a  specified  period  of  years.  A  somewhat  similar  plan  was  advo- 
cated some  years  later  by  Mr.  Elizur  Wright,  but  both  methods 
of  combining  a  savings  bank  with  a  life-insurance  company  proved 
failures  and  practically  impossible. 

As  early  as  1870  the  Peabody  Life  had  offered  a  peculiar 
plan  of  savings-bank  insurance  to  the  public,  originated  and 
copyrighted  by  H.  H.  Hadley,  the  vice-president  of  the  company. 
According  to  the  Monitor,  Mr.  Hadley  had  devised  this  plan  "for 
life  insurance  among  people  of  small  means,  to  be  consummated 
by  daily  or  weekly  deposits  of  small  amounts."  Nothing,  how- 
ever, came  of  any  one  of  these  attempts,  too  fanciful  in  theory  to 
be  useful  in  practice.  Neither  Keyes's  Labor-Term  Insurance  nor 
Hadley 's  Savings-Bank  Plan  seems  ever  to  have  been  adopted  by 
any  responsible  company,  and,  as  far  as  I  have  been  able  to  learn, 
no  policies  seem  ever  to  have  been  issued  covering  the  peculiar 
provisions  incorporated  in  these  attempts,  which,  however,  are  of 
historical  value  in  view  of  Mr.  Keyes's  undoubted  ability  as  a 
writer  on  savings-banks  history  and  Mr.  Hadley 's  later  connec- 
tion with  a  somewhat  similar  effort  which,  by  a  narrow  margin, 
failed  to  prove  a  success. 

Mr.  Hadley  seems  to  have  been  a  man  of  strong  convictions 
on  the  subject  of  life  insurance  for  the  masses,  but  wanting  in 
technical  knowledge  and  practical  ability  to  grasp  the  fundamental 
principles  of  Industrial  insurance.  Not  discouraged  by  his  failure 
to  make  a  success  of  his  savings-bank  plan  through  the  Peabody 
Life,  he  made  another  effort  through  the  Missouri  Valley  Life,  of 
Leaven  worth,  Kansas,  to  furnish  some  sort  of  reliable  indemnity 


INDUSTRIAL   INSURANCE   BEFORE    1874.  37 

to  the  insuring  public.  The  plan  of  this  company  was  to  issue 
policies  for  $100  each,  in  form  and  appearance  resembling  a 
greenback.  The  premium  was  uniform  for  all  ages,  while  the 
duration  of  the  policy  was  graded  according  to  age,  being,  in 
other  words,  a  term  policy,  somewhat  in  the  nature  of  the  plan 
advocated  by  Mr.  Keyes.  While  the  company  called  this  form  of 
insurance  "  Industrial "  insurance,  it  was  neither  that  nor  whole- 
life  insurance  in  any  form.  The  plan  was  inherently  weak,  and 
to  a  considerable  extent  a  deception,  in  that  it  opened  a  very- 
inviting  and  practicable  field  for  fraud.  The  Insurance  Times  in 
1873  well  spoke  of  this  plan  as  "one  of  the  most  objectionable 
attempts  at  insurance  that  has  ever  been  placed  before  the  Amer- 
ican public." 

The  Missouri  Valley  Life,  however,  transacted  a  not  incon- 
siderable amount  of  business  on  this  plan,  and  issued  as  many  as 
8,000  policies  during  1874,  5,700  policies  during  1875,  and  3,200 
policies  during  1876  ;  but  thereafter  the  business  dwindled  down  to 
nothing,  the  company  discontinuing  active  business  operations 
in  August,  1877. 

The  failure  of  the  Missouri  Valley  Life  to  make  a  success 
of  this  form  of  insurance  was  due  entirely  to  the  inherent  weak- 
ness of  a  scheme  which  in  all  essentials  was  the  very  opposite  of 
Industrial  insurance  as  practiced  by  the  British  Prudential.  The 
experiment,  however,  gave  proof  that  there  was  a  strong  demand 
for  life  insurance  in  small  amounts  and  on  a  convenient  method 
of  premium  payments,  and  it  was  now  only  a  question  of  time 
when  the  essentials  of  success  in  this  direction  would  be  fully 
recognized  in  the  success  of  the  British  Prudential.  Naturally, 
such  further  efforts  were  most  likely  to  be  made  in  the  large 
cities  of  the  East,  where  the  industrial  conditions  were  more 
favorable  to  the  extension  of  the  principles  and  practice  of  Indus- 
trial insurance;  and  early  in  1873  a  society  was  organized  with 
this  end  in  view,  in  Newark,  N.  J.,  which  in  a  few  years  was 
destined  to  become  the  corner-stone  of  the  present  Prudential 
Insurance  Company  of  America. 

According  to  the  Insurance  Monitor  for  July,  1873,  "The 
Widows'  and  Orphans'  Friendly  Society  was  chartered  this  year, 
under  date  of  April  3rd,  by  the  New  Jersey  Legislature,"  for 
the  purpose  of  placing  "the  blessings  of  life  insurance  within 
the  reach  of  those  classes  whose  narrow  means  restrict  them  to 
the  payment  of  monthly  premiums. ' '  It  was  further  explained 


38  HISTORY   OF   THE   PRUDENTIAL. 

that  "the  clerical  labor  has  generally  been  found  too  great  to 
admit  the  adoption  of  this  method  by  the  companies  directly.  But, 
through  the  aid  of  an  auxiliary  society  of  this  kind,  the  end  can  be 
accomplished,  and  all  the  benefits  of  legitimate  insurance  can  be 
secured  by  those  who,  if  they  are  inclined  to  insure  at  all,  fall  a 
prey  to  co-operation,  or  are  forced  to  join  some  benevolent  organ- 
ization." This  society  had  made  an  arrangement  with  the 
Piedmont  and  Arlington  Insurance  Company  for  insuring  the 
members  by  means  of  a  saving-fund  policy  at  ordinary  life  rates,— 
in  other  words,  it  did  not  differ  materially  from  the  numerous 
forms  of  Unions  or  Bunds  previously  dealt  with,  and  which  had 
for  their  object  the  insurance  of  working  people  in  substantial 
Ordinary  companies  through  the  medium  of  fraternal  or  bene- 
ficial societies  acting  as  soliciting  and  collecting  agencies.  As  has 
been  stated,  most  of  the  Unions  or  Bunds  were  of  German  origin, 
and  the  largely  Teutonic  character  of  The  Widows'  and  Orphans' 
Friendly  Society  is  indicated  by  the  names  of  the  men  who  organ- 
ized the  same,  and  of  whom  it  can  be  said,  with  all  truth,  that 
"they  builded  better  than  they  knew." 

Of  the  actual  business  transactions  of  this  society,  the 
objects  of  which  were  well  defined  as  assistance  in  sickness  and 
aid  in  defraying  the  funeral  expenses  of  deceased  members, 
few  facts  have  come  to  my  notice.  It  is  very  doubtful  whether 
the  society  ever  transacted  business  on  an  extensive  scale, 
probably  finding  it  difficult,  as  similar  societies  had,  to  do 
business  by  a  method  at  once  clumsy  as  to  practice  and  inherently 
weak  as  to  insurance  methods  and  principles.  The  permanent 
interest  in  this  society  and  its  historical  value  are  to  be  found  in 
the  fact  that  on  February  18,  1875,  the  name  of  the  society  was 
changed  to  The  Prudential  Friendly  Society,  which  title  was 
further  altered  in  1877  to  the  present  name — The  Prudential 
Insurance  Company  of  America. 


INDUSTRIAL   INSURANCE   IN   AMERICA   IN    1874.  39 


CHAPTER   IV. 

INDUSTRIAL   INSURANCE   IN    AMERICA    IN    1874. 

The  beginning  of  Industrial  insurance  in  the  United  States 
must  be  fixed  on  the  date  on  which  the  name  of  The  Widows' 
and  Orphans'  Friendly  Society  was  changed  to  The  Prudential 
Friendly  Society,  of  which  Mr.  John  F.  Dryden  was  made  the 
first  secretary,  as  he  had  been  instrumental  in  bringing  about 
the  reorganization  and  the  establishment  of  the  new  society  on 
actuarial  principles,  identical  in  all  respects  with  those  which 
underlie  the  transactions  of  the  large  and  successful  Ordinary 
life  companies  of  this  or  any  other  country. 

Of  the  events  affecting  life-insurance  history  during  the  two 
years  which  passed  from  the  date  of  the  charter  of  The  Widows' 
and  Orphans'  Society  to  the  date  of  the  foundation  of  The 
Prudential  Friendly  Society  only  brief  notice  can  be  taken  in 
our  historical  survey  of  the  facts  relating  to  the  origin  and  growth 
of  The  Prudential  Insurance  Company  of  America. 

The  Insurance  Times  continued  to  call  public  attention  to  the 
subject  of  Industrial  insurance  by  publishing  from  time  to  time 
tables  and  other  data  pertaining  to  the  practice  of  the  British 
Prudential.  Such  information  must  needs  have  been  of  vital 
interest  to  those  who  at  this  early  period  were  considering  the 
expediency  of  establishing  an  Industrial  insurance  company  in 
the  United  States.  It  is  much  to  the  credit  of  the  Insurance 
Times  that  it  early  recognized  the  inexpediency  of  uniting  the 
objects  of  Industrial  insurance  with  those  of  regular  life-insurance 
companies  operating  on  the  Ordinary  plan,  warning  American  life 
companies  to  rigidly  avoid  any  and  every  attempt  of  this  kind.* 

*  The  importance  of  this  suggestion  lies  in  the  fact  that  the  combina-  ' 
tion  of  Industrial  with  Ordinary  insurance  was  likely  to  prove  a  hindrance 
to  the  development  of  the  former  in  that  the  latter  being  already  estab- 
lished, the  former  would  receive  but  little  attention.  The  Prudential  Insur- 
ance Company  being  free  from  this  burden  in  the  beginning,  was,  therefore, 
enabled  to  develop  every  technical  feature  of  the  business  to  a  high  degree 


40  HISTORY   OF   THE   PRUDENTIAL. 

In  the  September  issue  of  the  Insurance  Times  for  1873,  this 
warning  was  repeated  in  the  following  words:  "Hundreds  of 
thousands  of  policies  can  at  once  be  issued  by  any  responsible 
company  that  will  bring  the  business  fairly  before  the  public  as  a 
special  feature.  It  can  never  be  well  done  through  any  secondary 
organization."  But  even  the  Insurance  Times  had  not  yet 
recognized  the  essential  difference  between  Industrial  insurance 
on  the  plan  of  the  British  Prudential  and  Ordinary  life  insur- 
ance transacted  on  the  monthly-premium  payment  plan,  being 
Apparently  more  in  favor  of  monthly  payments  than  in  favor  of 
genuine  Industrial  insurance,  in  which  the  payments  are  made 
weekly  and  collected  from  the  houses  of  the  insured.  By  the 
end  of  the  year  1873  the  establishment  of  genuine  Industrial 
insurance  was,  therefore,  apparently,  as  far  off  as  ever,  and  as 
late  as  November,  1873,  the  Insurance  Times  lamented  the  fact  that, 
in  spite  of  all  the  arguments  advanced  and  all  the  rich  promises  of 
reward,  no  company  had  come  forward  to  follow  its  advice,  and 
there  is  no  record  of  any  serious  effort  to  organize  an  Industrial 
insurance  company  during  the  year. 

The  confusion  of  ideas  as  to  the  true  nature  of  Industrial 
insurance  on  the  part  of  the  Insurance  Times,  in  advocating  a 
system  of  monthly-premium  payments,  is  one  which  can  be 
explained  largely  on  the  ground  that  life-insurance  ideas  in 
general  were  still  in  a  very  primitive  state.  This  is  apparent 
from  another  confusion  of  thought  which  is  only  too  often  made 
in  well-intentioned  remarks  on  life  insurance  even  at  the 


of  perfection  before  assuming  the  burdens  of  Ordinary  insurance.  The 
Ordinary  insurance  companies  which  attempted  to  transact  an  Industrial 
business  as  a  side  issue  invariably  failed  to  make  a  success  of  the  business 
and  discontinued  the  Industrial  Branch  after  a  few  years  of  experiment  in 
this  direction.  On  the  other  hand,  the  Ordinary  companies  which  attempted 
to  transact  an  Industrial  business  and  for  the  time  being  devoted  all  their 
energies  and  efforts  to  the  successful  transaction  of  the  Industrial  business 
succeeded  in  this  direction,  but  for  the  time  being  fell  materially  behind  in 
their  Ordinary  business.  While,  therefore,  inherently  there  are  no  reasons 
why  an  Ordinary  company  should  not  transact  an  Industrial  business, 
practically  it  was  desirable  that  the  business  should  be  first  taken  up  by  a 
company  devoted  exclusively  to  the  transaction  of  the  Industrial  business. 
Hence,  the  fact  that  Industrial  companies  to-day  transact  a  very  large 
volume  of  Ordinary  business  is  not  to  be  considered  as  a  contradiction  of 
the  warning  note  of  the  Insurance  Times>  which  was  fully  justified  by  the 
conditions  existing  at  the  time  the  article  was  written. 


INDUSTRIAL   INSURANCE   IN   AMERICA   IN    1874.  41 

present  time.  Speaking  of  life  insurance  for  the  poor  and 
people  of  small  means  who  need  insurance  protection  most, 
the  Insurance  Times,  in  its  issue  for  December,  1873,  pointed 
out  that  '  '  The  benefits  of  life  insurance  are  peculiarly  designed 
for  persons  of  moderate  means.  As  charitable  institutions,  the 
companies  ought,  from  motives  of  public  spirit,  to  make  it 
one  of  their  principal  objects  to  make  small  policies  readily 
accessible."  No  error  can  be  more  serious  and  at  the  same 
time  more  self-evident  than  that  life  insurance  is  in  any  sense 
a  charity,  for,  to  the  contrary,  it  is,  in  all  respects,  a  business 
enterprise  identical  with  banking  or  any  other  form  of  com- 
merce. Through  life  insurance  an  immense  amount  of  misery 
is  alleviated  and  an  incalculable  amount  of  human  suffering  pre- 
vented, but  it  is  not  as  a  charitable  agency  that  life  insurance 
has  brought  about  this  much-to-be-desired  end.  To  confound 
life-insurance  companies  —  which  are  social  institutions,  making 
for  social  and  economic  independence  —  with  charitable  institu- 
tions, the  best  of  which  must  always,  even  though  in  a  most 
subtle  manner,  make  for  individual  dependence,*  is  an  error 
which  can  not  be  too  much  deplored,  and  one  to  which,  I  be- 
lieve, are  due  most  of  the  sins  of  legislators  who  look  upon  life- 
insurance  companies  as  semi-charitable  institutions  which  should 
grant  unheard-of  favors  and  gratuities,  cash-surrender  values,  and 
paid-up  policy  provisions  in  excess  of  the  actual  values  which  a 
company  may  have  on  hand  or  have  received  for  the  purpose  of 
meeting  its  contracts.  This  error  was  repeated  in  the  Massa- 
chusetts Insurance  Report  for  1873,  in  the  statement  that  "  I/ife 
insurance  seems  to  have  lost  the  character  of  a  purely  benevolent 
institution,  and  has  begun  to  assume  that  of  a  mere  speculation.  '  ' 
As  a  matter  of  fact,  life  insurance  at  no  period  of  its  history 
has  had  the  character  of  a  purely  benevolent  institution,  and  had 
not,  at  this  period,  assumed  the  character  of  a  speculative  enter- 
prise. The  Insurance  Times  (Dec.,  1873),  however,  fully  recog- 
nized the  true  nature  of  life  insurance  in  its  interpretation  of  the 
character  and  objects  of  the  British  Prudential  in  the  statement 
that  "  the  Prudential  is  a  company  which  makes  no  loud-sounding 


*  "  I  fully  believe  that  to-day  the  next  most  pernicious  thing  to  vice  is 
charity  in  its  broad  and  popular  sense."  (W.  G.  Surnner.) 

"The  number  of  our  almshouses,  asylums  and  charitable  institutions 
of  all  sorts,  of  which  we  boast  so  much,  is  really  our  shame."  (R.  T.  Ely.) 


42  HISTORY   OF   THE    PRUDENTIAL. 

pretensions — it  makes  no  parade  of  philanthropy,  and  of  its  wish 
to  benefit  the  human  race."  This  company  says,  in  substance, 
"We  are  business  men,  and  must  be  paid  for  our  trouble;  we 
therefore  charge  an  extra  premium  for  extra  trouble,  and  collect- 
ing money  shilling  by  shilling  involves  no  little  extra  trouble. 
But  in  return  we  guarantee  you  as  much  absolute  security  as  is 
enjoyed  by  those  who  have  large  sums  to  invest,"  and  hence 
the  conclusion  that  ' '  If  the  amounts  which  were  actually  paid  to 
workingmen  upon  the  occurrence  of  death  by  the  life  insurance 
companies  during  the  year  1872  *are  compared  with  the  relief 
afforded  within  the  same  period  by  the  friendly  societies,  it  will 
be  found  that  the  insurance  companies  have  proved  in  practice 
far  the  more  beneficial,"  *  and  the  further  conclusion  that  "The 
Prudential  Assurance  Company  [of  London]  has  not  only  enlarged 
the  vSphere  of  life  insurance,  but  has  conferred  a  substantial 
benefit  upon  the  working  classes.  We  can  readily  appreciate  the 
feelings  of  pride  with  which  the  directors  of  the  company,  in  look- 
ing back  upon  the  splendid  success  which  has  been  achieved 
by  the  company  during  the  past  year,  claim  that  their  triumph 
is  one  of  the  most  memorable  that  has  ever  been  gained 
by  any  life  insurance  company,"  and  to  these  remarks  the  Insur- 
ance Times  adds,  "  We  urge  once  more,  as  we  have  already  urged 
before,  the  speedy  establishment  of  a  good  industrial  insurance 
company  in  New  York." 

Reference  has  been  made  to  numerous  attempts  to  combine 
the  functions  of  a  savings  bank  with  the  functions  of  a  life-insur- 
ance company,  and  one  reason  why  so  many  of  these  projects 
originated  at  just  about  this  time  is  to  be  found  in  the  fact  that, 
in  consequence  of  numerous  failures  of  Ordinary  life  companies, 
savings  banks  were  held  in  higher  esteem  among  the  working 
classes  than  the  numerous  life-insurance  projects  of  the  period. 
Once  more  a  distinct  antagonism  of  life-insurance  companies  to 
savings  banks  was  developed,  but,  as  was  pointed  out  by  the 

*  In  a  paper  read  at  the  International  Congress  of  Charities,  held  in 
Chicago  in  1893,  it  was  pointed  out  that  in  the  town  of  Rochdale,  out  of  a 
total  sum  of  ^23,952  paid  out  for  funeral  expenses,  ^19,493  was  paid  by 
Industrial  companies,  while  the  local  Friendly  Societies  contributed  ^4,027 
and  the  Trades  Unions  ^432.  Thus  it  was  shown  that  in  a  town  recognized 
by  economists  as  one  in  which  thrift  institutions  of  all  kinds  have  prospered 
most,  Industrial  insurance  holds  to-day  first  rank  as  a  means  of  providing 
for  the  expenses  of  burial  and  incidentally  for  the  cost  of  the  last  illness. 


INDUSTRIAL   INSURANCE    IN    AMERICA    IN    1874.  43 

Monitor  and  other  insurance  journals,  the  one  class  of  institu- 
tions had  never  seriously  interfered  with  the  other,  and,  "  on  the 
contrary,  it  is  more  likely  that  the  business  of  each  has  been 
larger  on  account  of  the  other's  existence."  However,  as  I  have 
had  occasion  to  point  out,  habits  of  systematic  saving  had  not 
been  extensively  developed  in  the  industrial  population  previous 
to  1875.  The  difference  between  savings  banks  and  insurance 
companies  is  essential.  The  savings  bank  represents  a  different 
form  of  voluntary  thrift  from  that  of  the  insurance  company. 
The  depositor  is  not  required,  and  is  not  induced  to  deposit 
weekly  or  monthly,  the  surplus  of  his  income  over  his  expenses, 
but,  once  he  becomes  a  life-insurance  policy-holder,  a  certain 
degree  of  compulsion  forces  him  to  make  premium  payments 
weekly,  quarterly,  semi-annually  or  annually,  as  the  case  may! 
be.  This  essential  difference  between  savings  banks  and  life- 
insurance  companies  should  be  better  recognized  than  has  thus 
far  been  the  case,  and  from  this  point  of  view,  I  feel  satisfied  that 
insurance  companies,  especially  Industrial  insurance  companies, 
represent  a  more  distinct  form  of  thrift  promotion  than  the  ordi-J 
nary  savings  banks. 

Previous  failures  to  combine  the  two  thrift  functions  into 
one  had  not  discouraged  those  who  were  more  favorably  inclined 
towards  savings  banks  than  towards  life-insurance  companies. 
Among  those  who  made  the  most  determined,  as  it  was  in  a 
measure  the  last,  effort  to  establish  savings-bank  insurance  was 
Mr.  Elizur  Wright,  the  well-known  actuary  and  former  Insur- 
ance Commissioner  of  Massachusetts,  who  in  1872  commenced 
an  agitation  in  favor  of  a  Family  Bank,*  which,  though  devised 
by  one  experienced  and  familiar  with  life-insurance  theories  and 
practice,  was  at  once  as  vicious  and  as  weak  as  any  method 
which  had  ever  been  devised  to  develop  both  objects  of  savings 
and  insurance.  In  advocating  his  plan  of  savings-bank  insur- 
ance, Mr.  Wright  went  to  such  extremes  that  in  the  end  he 
became  the  open  antagonist  and  enemy  of  all  forms  of  life  insur- 
ance, conveying  to  the  public  the  idea  that  ' '  the  system  of  life 
insurance  as  generally  conducted  was  a  humbug  and  wrong, 
iniquitous  and  deceptive,  unfair  to  the  policy-holder,  unsafe  to 
the  companies,  and  altogether  behind  the  age,  and  unworthy  of 
the  American  people."  The  attacks  on  life  insurance  made  by 


Politics  and  Mysteries  of  Life  Insurance,  Boston,  1873. 


44  HISTORY   OF  THE   PRUDENTIAL. 

Mr.  Wright  induced  Mr.  Knglish,  the  editor  of  the  Insurance 
Times,  and  a  life-long  friend  of  Mr.  Wright,  to  express  himself 
in  an  open  letter  as  follows  :  ' '  The  failure  of  your  attempt  to 
foist  your  scheme  upon  the  life-insurance  companies  was  followed 
by  your  bitter  and  unwarrantable  attacks  upon  the  life-insur- 
ance system  and  companies  of  America.  You  have  left  nothing 
undone,  unsaid  and  unpublished,  to  destroy  public  confidence  in 
all  the  life  companies,  and,  if  possible,  to  ruin  the  business' '  (Insur- 
ance Times,  September,  1874).  It  would  be  difficult  to  frame  a 
more  severe  and  just  condemnation  than  this.  Mr.  Wright's  plan 
was  never  carried  into  actual  practice,  but  it  is  claimed,  by  those 
who  are  familiar  with  the  facts,  that  some  of  the  companies  which 
embodied  some  of  Mr.  Wright's  theories  into  their  practice,  and 
which  were  guided  by  his  advice,  were  unable,  in  consequence  01 
his  unsound  theories,  to  meet  their  outstanding  contract  obliga- 
tions, to  the  serious  disappointment  of  the  thousands  of  widows  and 
orphans  who  were  thus  deprived  of  their  legitimate  support. 

While,  by  the  close  of  1874,  the  problem  of  life  insurance  for 
the  masses  had,  no  doubt,  received  more  serious  and  thoughtful 
recognition  than  ever  before,  no  one  seems  to  have  had  the  cour- 
age to  undertake  a  task  which  gave  every  indication  of  failure 
and  very  little  assurance  of  success. 

As  an  indication  of  the  attitude  of  experienced  life  managers 
towards  the  new  system  of  insurance,  by  this  time  so  success- 
fully practiced  in  England,  I  quote  a  few  remarks  from  inter- 
views reported  in  the  Spectator  during  the  first  half  of  the 
year  1874.  These  interviews  are  very  suggestive  in  the  light  of 
future  events,  and  I  abstract  a  few  replies  which  are  of  special 
importance.  In  answer  to  the  question  put  by  the  Spectator,  l '  Do 
you  think  that  this  system  can  be  made  to  furnish  safe  insur- 
ance?" Mr.  Heber  Smith,  the  Vice- President  of  the  Northwestern 
Mutual  Life  Insurance  Company,  replied  :  "  I  have  not  become 
familiar  enough  with  the  principles  underlying  the  '  industrial ' 
scheme  of  life  insurance  to  speak  definitely  regarding  its  adapta- 
bility, but  from  what  I  know  of  it,  I  have  no  desire,  as  an  officer, 
to  experiment  with  it"  (January,  1874).  In  reply  to  the  same 
question  Mr.  Samuel  H.  White,  Vice-President  of  the  Charter  Oak 
Life  Insurance  Company,  replied:  "So  far  as  I  have  examined 
the  plan,  I  think  it  impracticable,  unless  the  sole  object  is  for  the 
poorest  classes  to  provide  a  '  burial  fund.'  Practically,  it  can  not 
do  much  good"  (February,  1874).  Mr.  Nathan  D.  Morgan, 


INDUSTRIAL   INSURANCE   IN   AMERICA   IN    1874.  45 


President  of  the  North  American  Life  Insurance  Company,  re- 
plied to  substantially  the  same  question,  "I  would  promote, 
in  every  proper  way,  a  habit  among  the  poorer  classes  of  in- 
vesting a  portion  of  their  earnings  in  life  insurance.  Some  mode 
should  be  devised  for  doing  this  at  less  cost  than  under  the 
present  agency  system"  (May,  1874).  Thus  it  appears  that 
some  of  those  who  were  in  a  position  to  know  either  did  not 
favor  the  plan,  or  but  imperfectly  understood  the  essential  prin- 
ciples of  the  theory  and  practice  of  the  system,  while  no  one  seems 
to  have  had  the  courage  to  undertake  the  formation  of  a  company 
designed  to  transact  Industrial  insurance,  even  in  connection 
with,  or  as  a  part  of,  the  business  of  an  Ordinary  life  company. 

While  the  insurance  press  continued  to  give  considerable 
attention  to  the  general  subject  of  Industrial  insurance,  the 
Insurance  Times,  more  than  any  other  publication,  continued  its 
advocacy  of  the  system,  and  of  the  establishment  of  an  Indus- 
trial company  in  the  United  States.  The  editor,  Mr.  Stephen 
English,  not  only  gave  space  to  the  general  discussion  of  the 
principles  and  practice  of  the  business,  but  supplemented  such 
theoretical  discussions  with  practical  demonstrations  of  the  bene- 
fits and  results  of  Industrial  insurance  from  the  standpoint  of  public 
policy.  In  an  article  entitled  ' '  The  Progress  of  Industrial  Insur- 
ance," the  Insurance  Times  (April  and  May,  1874)  pointed  out  the 
educational  influence  of  this  work  among  the  masses  of  the  people 
as  in  itself  a  matter  of  importance  and  of  immense  value.  In 
explanation,  the  statement  was  added  that  "Year  after  year  these 
thousands  of  artisans  and  operatives,  thus  effecting  insurance  on 
their  lives,  are  taught  thriftiness,  carefulness,  prudence,  and  fore- 
thought. The  very  fact  that  these  thousands  of  workingmen  are 
induced  to  make  timely  provision  against  the  day  of  death,  by  life 
insurance,  for  even  ever  so  small  an  amount,  is  a  proof  that  the 
recklessness,  selfishness,  and  spendthrift  habits  of  these  men  are 
giving  way  before  better  influences,  and  that  the  future  of  their 
homes  and  families  is  of  more  consideration  to  them  than  to  any 
of  their  class  in  days  gone  by. ' '  A  more  worthy  and  deserved 
tribute  has  seldom  been  paid  to  the  English  workingmen  than  in 
the  above  lines,  written  by  one  who,  although  unknown  to  the 
American  working  people,  yet  rendered  them  a  most  important  ser- 
vice, and  to  him  Industrial  insurance  owes  a  debt  of  gratitude,  as 
one  who  during  a  dark  hour  of  American  social  history  did  much, 
if  not  most,  to  keep  the  facts  pertaining  to  Industrial  insurance 


46  HISTORY   OF   THE   PRUDENTIAL. 

before  the  public,  and  who,  in  spite  of  discouragement,  did  not 
despair  of  seeing  his  ambition  realized  by  the  early  establishment 
of  an  American  Industrial  insurance  company. 

It  was  otherwise  with  Mr.  Blizur  Wright,  who,  for  rea- 
sons which  will  probably  never  be  known,  had  been  opposed 
to  Industrial  insurance  almost  from  the  time  the  system  had 
been  gaining  ground  in  England,  and  who,  as  far  back  as 
1865,  had  been  making  attacks  on  what  he  called  Industrial 
insurance,  but  what  in  reality  was  the  old  system  of  Burial 
Societies,  which  was  then  rapidly"  passing  away,  giving  place 
to  the  modern  form  of  workingmen's  insurance  on  the  Indus- 
:rial  plan. 

In  an  open  letter  to  the  editor  of  the  Insurance  Times,  dated 
May  26,  1874,  Mr.  Wright  summed  up  his  charges  against 
Industrial  insurance,  stating  that  it  was  his  conviction  that  "the 
evil  of  Mr.  Harben's  gigantic  success  decidedly  outweighs  the 
good."  Among  other  charges  Mr.  Wright  asserted,  as  a  matter 
of  fact,  that  the  system  was  one  productive  of  infanticide,  that 
the  companies  were  living  on  lapses,  and  that  the  general  system 
was  an  iniquitous  one,  and  practically  of  no  further  benefit  than 
that  it  was  profitable  to  Mr.  Harben  and  the  stockholders  in  the 
Prudential.  Mr.  Wright  confined  himself  to  generalities,  making, 
however,  specific  charges  without  a  single  statement  of  fact,  and, 
though  himself  an  actuary,  he  expressed  an  actuarial  opinion 
without  actuarial  testimony  or  facts  to  support  it.  He  referred 
to  Mr.  Gladstone's  remarks  in  1864,  to  the  effect  that  the  Pruden- 
tial was  insolvent,  but  he  did  not  say  that  these  remarks  of  Mr. 
Gladstone's  had  been  refuted  and  proven  unfounded  by  the  high- 
est actuarial  authority  in  England,  the  President  of  the  Institute 
of  Actuaries.  He  repeated  the  thirty-year-old  charge  of  child- 
murder  for  insurance  money,  occasionally  made  against  the  old- 
time  type  of  Burial  Clubs,  without  citing  a^single  case  in  support 
of  his  monstrous  allegations. 

Mr.  Wright  was  immediately  answered  by  Mr.  James  Alex- 
ander Mowatt,  a  man  thoroughly  familiar  with  the  practice  of 
Industrial  insurance  in  England,  and  also,  under  date  of  June 
23rd,  by  Mr.  Harben,  who,  in  an  open  letter  addressed  to  the 
editor  of  the  Insurance  Times  (published  August,  1874),  emphati- 
cally and  ably  refuted  the  charges  made  by  Mr.  Wright  by  a 
simple  statement  of  the  facts  in  the  case.  Mr.  Harben  concluded 
his  letter  with  the  following  remarks,  which  I  quote  as  they  are 


INDUSTRIAL   INSURANCE   IN    AMERICA   IN    1874.  47 

likely  to  be  of  permanent  interest  to  the  student  of  the  develop- 
ment of  Industrial  insurance  in  this  country  : — 

"The  theory  that  a  working  man  should  be  prohibited  from 
insuring  the  means  of  burying  his  child  because  the  sum  of 
thirty  shillings  (seven  and  a  half  dollars)  will  tempt  him  to 
commit  murder,  hardly  needs  serious  discussion.*  Can  Mr. 
Wright  support  this  argument  by  the  slightest  trustworthy  evi- 
dence ;  and  if  he  can,  is  murder  for  the  sake  of  insurance  money 
confined  to  'the  poor,'  because,  if  not,  why  not  go  further? 

' '  Why  do  the  critics  of  this  Company  always  speak  in  gen- 
eral terms  ?  Why  do  they  not  make  some  definite  charge  against 
it,  and  instead  of  confining  themselves  to  * '  may-bes  ' '  and  ' '  no 
doubts,"  point  out  any  engagement  broken,  any  benefit  with- 
held, or  any  promise  unfulfilled  ?  But  no  !  The  Prudential 
Company  may  have  faithfully  performed  every  engagement  into 
which  it  has  entered  ;  it  may  have  opened  up  a  new  source  of 
joint-stock  enterprise ;  it  may  have  brought  the  benefits  of  life 
insurance  within  the  reach  of  the  humblest  classes ;  but  it  has 
not  justified  the  predictions  that  would-be-prophets  made  by 
egregious  failure.  It  has  committed  the  unpardonable  crime  of 
success." 

To  these  distinct  and  well-supported  charges  of  inconsistency, 
ignorance  and  perversion  of  facts  Mr.  Wright  made  no  reply, 
except  in  a  rambling  communication  under  date  of  August  i4th, 
in  which  he  once  more  shifted  the  burden  of  proof  to  generalities 
not  deserving  of  space.  This  unworthy  attempt  to  evade  the  real 
points  at  issue,  brought  forth  a  most  emphatic  and  scathing  reply 
from  Mr.  English,  the  editor  of  the  Insurance  Times  (September, 
1874),  who  expressed  himself,  in  part,  as  follows:  "You  have, 
upon  your  own  admission,  made  mistakes  in  your  attempts  to 
reform  life  insurance,  and  your  blunders  have  made  the  insurance 
fraternity  mistrustful  of  your  theories  and  experiments.  The 
officers  of  our  life  companies  would  be  recreant  to  their  fiduciary 
duties  if  they  allowed  themselves  to  be  bullied  into  an  acceptance 
of  y'our  scheme,  and  they  onl)?"  show  a  proper  and  manly  spirit  in 

*  "The  time  has  passed  for  dealing  with  the  masses  as  children  who 
are  to  be  treated  to  truth  in  quantities  and  on  occasions  suited  to  their 
welfare  or  the  interests  of  society.  The  political  economist  only  aban- 
dons his  ground  of  vantage  and  forfeits  the  confidence  of  the  community 
when  he  accepts  any  responsibility  for  the  use  that  may  be  made  of  the 
truth  he  discovers  and  discloses."  (Francis  A.  Walker.) 


48  HISTORY   OF  THE   PRUDENTIAL. 

resenting  your  misrepresentations  and  decrial,  by  letting  you  con- 
temptuously and  severely  alone. ' ' 

Industrial  insurance  can  not  be  said  to  have  been  injured 
by  this  controversy,  and  the  subsequent  correspondence  on  the 
subject.  Clear  and  emphatic  proof  had  been  produced  that  the 
system  was  not  only  worthy  of  public  confidence,  not  only  met 
a  great  public  want,  but,  also,  could  be  undertaken  on  a  business 
basis,  and  was  likely  to  produce  a  fair  rate  of  profit  in  return. 

Forces,  independent  of  the  agitation  of  the  Insurance  Times, 
were  making  for  a  better  public  understanding  of  the  subject,  and 
tending  towards  a  more  clearly  recognized  necessity  for  the  estab- 
lishment of  genuine  Industrial  insurance  in  the  United  States. 
While,  as  we  have  seen,  Mr.  Wright,  as  a  former  Commissioner 
of  Insurance  of  Massachusetts,  had  proclaimed  himself  an  open 
and  uncompromising  opponent  to  the  introduction  of  the  system, 
another  Massachusetts  Commissioner,  Mr.  Julius  Clarke>  in  his 
annual  report  for  1874,  came  forth  plainly  and  emphatically  in 
favor  of  the  system  of  Industrial  insurance  as  practiced  by  the 
British  Prudential.  In  this  report,  which  must  ever  be  looked 
upon  as  one  of  the  foundation-stones  of  the  present-day  structure 
of  American  Industrial  insurance,  Mr.  Clarke  addressed  the  Legis- 
lature as  follows : — 

' '  In  presenting  to  the  Legislature  a  general  view  of  the  dif- 
ferent matters  of  interest  and  importance  relating  to  insurance, 
which  have  attracted  attention  during  the  last  year,  reference 
should  be  made  to  the  subject  of  industrial  insurance.  The  term 
is  applied  with  sufficient  appropriateness  to  insurance  for  small 
amounts,  supposed  to  be  particularly  adapted  to  the  wants  of 
persons  of  small  means,  who  are  engaged  in  various  industrial 
pursuits."  After  giving  a  brief  historical  sketch  of  the  origin 
and  growth  of  Industrial  insurance  in  England,  Mr.  Clarke  dealt 
with  the  practice  of  the  British  Prudential,  and  pointed  out  that 
1 '  Though  it  does  not,  like  the  old  Friendly  Societies,  guarantee 
allowances  in  sickness,  yet  like  them  it  adjusts  the  amount  of 
insurance  to  the  premium  paid  ;  that  is  to  say,  instead  of  naming 
certain  sums  as  the  premiums  for  which  it  will  insure  the  payment 
of  ten,  a  hundred  or  a  thousand  pounds  at  death,  it  offers  certain 
amounts  of  insurance  in  return  for  the  payment  of  small  fixed 
sums  each  week ;  such  as  one  penny,  twopence,  threepence  or 
fourpence,  as  the  case  may  be.  Like  the  Friendly  Societies,  also, 
the  company  sends  its  collectors  from  house  to  house  and  collects 


INDUSTRIAL   INSURANCE   IN   AMERICA   IN    1874.  49 

the  premiums  weekly."  Thus  Mr.  Clarke  had  thoroughly  and 
completely  grasped  three  of  the  four  essential  principles  of  Indus- 
trial insurance, — the  charge  of  a  weekly  premium,  the  adjustment 
of  the  amounts  of  insurance  to  this  weekly  premium,  and  the  col- 
lection of  the  premium  weekly  from  the  house  of  the  insured, — 
and,  as  we  shall  presently  note,  he  had  not  overlooked  the  fourth 
essential,  the  principle  of  family  insurance — that  is,  of  persons  of 
both  sexes  and  all  ages. 

Mr.  Clarke  did  not  fail  to  recognize  the  historic  continuity 
of  the  business  and  its  direct  relation  to  the  Friendly  Societies 
and  earlier  forms  of  burial  associations.  In  his  own  words,  ' '  The 
secret  of  the  success  of  this  company  may  be  found  in  the  fact 
that  the  ground  had  been  thoroughly  prepared  for  the  new  system 
by  the  old  societies.  The  company  merely  takes  advantage  of 
tradition,  habits  and  ideas  that  have  been  the  growth  of  more  than 
a  century.  In  their  adoption  and  application  it  is  hoped  that  the 
company  will  not,  like  so  many  Friendly  Societies,  prove  in  the 
end  a  failure." 

In  explanation  of  the  fourth  cardinal  principle  of  Industrial 
insurance, — that  is,  the  insurance  of  every  member  of  the  family, 
and  incidentally  the  insurance  of  children, — Mr.  Clarke  stated  that 
"One  of  the  objections  made  to  the  Company's  mode  of  doing 
business,  is,  that  it  grants  insurance  upon  the  lives  of  young 
children.  This  was  the  practice  of  the  Friendly  Societies,  and 
in  regard  to  them,  also,  the  objection  was  urged  that  the  practice 
held  out  inducements  to  infanticide.  The  managers  of  the 
Friendly  Societies  contended  in  reply,  that  the  character  of  poor 
people  is  not  such  as  entitles  the  objection  to  weight,  and  for  the 
credit  of  human  nature  it  is  hoped  they  were  right.  They  main- 
tained further,  that  even  if  the  danger  existed,  which  they  denied, 
it  might  be  amply  guarded  against  by  requiring  proper  medical 
examinations  and  certificates.  The  contract  of  life  insurance 
being  unlike  that  covering  a  fire  or  marine  risk,  a  contract  of 
indemnity,  it  is  not  absolutely  necessary  that  the  interest  in  the 
life  insured  should  be  of  a  pecuniary  nature.  The  parental  rela- 
tion in  itself  is  all  that  is  required  to  support  the  contract.  Were 
a  pecuniary  interest  requisite,  life  insurance  might  still  be  properly 
invoked  to  provide  against  extraordinary  expenses  forced  upon  a 
poor  man  by  sickness  or  death  in  his  family,  as  well  as  to  compen- 
sate him  for  the  loss  of  aid  and  assistance  derived  from  the 


J 


50  HISTORY   OF  THE   PRUDENTIAL. 

services  of  his  child."  This  extended  quotation  shows  how 
carefully  Mr.  Clarke  had  gone  into  the  facts  of  the  case,  and  how 
well  he  had  considered  the  pros  and  cons  of  a  question  to  which 
there  were  bound  to  be  at  least  two  sides. 

Mr.  Clarke  had  also 'considered  the  question  of  cost  and  the 
expense  rate  of  transacting  an  Industrial  business,  stating  that 
' '  It  has  also  been  stated  that  the  rates  charged  by  the  Prudential 
upon  its  small  policies,  are  unreasonably  high  in  proportion  to 
those  usually  charged  upon  policies  of  larger  amounts  ;  also  that 
it  makes  no  dividends,  and  pays  no  surrender  values";  but,  he 
adds,  "  it  is  unnecessary  for  our  purpose  to  examine  in  detail  the 
Company's  mode  of  doing  business,  if  the  prices  it  charges  are 
out  of  proportion  to  the  benefit  it  confers,  the  proper  ratio  will 
ere  long  be  established  by  competition."  Mr.  Clarke  recognized 
fully  that  stability  was  the  main  point  in  regard  to  all  institutions 
created  for  the  purpose  of  insurance,  and  especially  so  in  the  case 
of  those  designed  to  bring  life  insurance  within  the  reach  of  the 
masses.  Quoting  his  own  words,  ' '  The  number  of  persons  whose 
happiness  is  staked  upon  the  solvency  of  institutions  of  the  latter 
class  is  larger,  and  they  are  persons  whose  situation  is  such  that 
the  distress  produced  by  disappointment  is  more  cruel. "  It  is 
clear  that  Mr.  Clarke  realized  fully  that  the  most  vital  element  in 
Industrial  insurance  is  the  absolute  necessity  that  such  insur- 
ance shall  be  of  the  same  intrinsic  value  as  life  insurance  on  the 
Ordinary  plan  sold  to  the  well-to-do,  leaving  the  question  of  cost 
and  the  expenses  of  conducting  the  business,  w7hich  consists  of  a 
multitude  of  intricate  transactions,  to  .the  people  themselves  and 
to  the  law  of  competition  which  regulates  profits  in  similar  busi- 
ness undertakings. 

Extended  consideration  was  thus  given  by  an  intelligent 
Insurance  Commissioner  to  a  business  which  had  not  yet  been 
established  in  this  country,  and  his  views  were  communicated 
to  the  Legislature  of  Massachusetts  solely  for  the  purpose  of 
placing  before  the  people  of  the  State  the  facts  pertaining  to  a 
business  which,  from  his  point  of  view,  was  one  of  great  public 
benefit,  and  which  was  deserving  of  attention  from  the  stand- 
point of  public  policy.  His  opinion  as  to  whether  the  time  had 
come  for  the  organization  of  such  companies  in  this  country,  is 
expressed  in  the  following  quotation  :  "  It  does  not  of  course  neces- 
sarily follow,  that  because  there  is  a  demand  in  England  for  small 


INDUSTRIAL   INSURANCE   IN   AMERICA   IN    1874.  51 

policies,  as  shown  by  the  experience  of  the  Benefit  Societies  and 
the  success  of  the  Prudential,  that  therefore  a  similar  demand 
exists  in  this  country.  Various  circumstances,  however,  indicate 
that  the  want  exists  here  also.  As  one  of  these,  may  be  mentioned 
the  great  variety  of  forms  in  which  what  is  called  co-operative 
insurance  crops  out.  This  Department  has  long  been  and  still 
is  greatly  embarrassed  by  the  frequent  attempts  to  impose  this 
co-operative  fallacy  upon  the  community,  and  all  the  more  so 
because  they  are  often  made  by  people  of  most  excellent  inten- 
tions and  unimpeachable  respectability.  Though  co-operative 
insurance  sometimes  resembles  industrial  insurance  in  the  small- 
ness  of  the  amounts  in  which  it  is  furnished,  it  is  in  substance 
essentially  different. 

' '  All  the  different  contrivances  practically  adapted  for  the  \ 
promotion  of  saving,  among  which  life  insurance  is  to  be  consid-  ( 
ered  one,  are  deserving  of  encouragement.  They  increase  the 
capital  of  the  community,  indispensable  for  the  organization  of 
industrial  enterprises,  and  aid  powerfully  in  the  development  of 
the  material  wealth.  /  Numerically  the  people  of  small  means  form 
a  large  part  of  the  population,  and  their  contributions,  although 
humble  singly,  are  in  the  aggregate  of  importance.  Any  accumu- 
lation  of  means  which  inures  for  their  benefit  is  valuable,  not  only 
on  account  of  the  capital  which  it  furnishes  taken  collectively,  but  j 
also  because  it  brings  improvement  to  precisely  the  very  people  j 
whose  material  condition  stands  most  in  need  of  it."  And, 
finally,  '  *  The  further  extension  of  life  insurance  in  Massachusetts 
is  no  doubt  a  subject  of  so  much  importance,  that  it  might  very 
properly  occupy  the  attention  of  the  Legislature.  But  it  is  very 
doubtful  whether  the  Legislature  could  devise  any  measures  that 
would  be  of  service,  in  aiding  directly  in  the  introduction  of  indus- 
trial insurance.  Fashions,  however,  are  so  contagious  that  it  is 
not  unlikely  that  some  attempt  may  be  made  to  introduce  here  a 
kind  of  insurance  at  present  so  popular  abroad.  Should  this  be 
the  case,  it  is  highly  desirable  that  legislation  should  establish  all 
proper  precautions  against  insolvency  and  fraud. ' ' 

The  report  of  Mr.  Clarke  could  hardly  have  become  generally 
known  until  after  the  first  half  of  the  year  1874,  for,  as  is  usual 
with  public  documents,  they  are  printed  and  distributed  to  the 
public  some  months  after  the  close  of  the  legislative  session ; 
hence  it  is  not  strange  that  it  was  not  until  the  latter  part  of  the 


52  HISTORY  OF  THE)   PRUDENTIAL. 

year  that  a  new  and  apparently  energetic  effort  was  made  to 
carry  the  frequent  suggestions  of  the  Insurance  Times  and  the 
more  recent  suggestions  of  Commissioner  Clarke  into  actual 
execution.  In  the  Insurance  Times  for  October,  1874,  is  a  notice 
of  the  proposed  organization  of  a  company  contemplating  the 
transaction  of  an  Industrial  business,  which  I  quote  as  follows  : 
"The  appeal  made  by  Commissioner  Clarke,  in  behalf  of  the 
requirements  of  the  industrial  classes  with  respect  to  life  insur- 
ance, has  met  with  a  prompt  response  from  the  capitalists  of  this 
city  [New  York].  Progress  has  already  been  made  in  the 
organization  of  a  new  life  company,  to  be  entitled  the  "  Prudential 
Insurance  Company  of  America,"  to  be  conducted  on  a  plan 
similar  to  that  of  the  Prudential  of  London,  which  has  been 
attended  with  so  much  success  and  benefit  to  the  indigent  work- 
ing classes. ' ' 

Despite  the  preceding  businesslike  announcement,  nothing 
seems  to  have  been  done  to  effect  an  organization,  and  there  is  no 
record  that  the  company  was  ever  incorporated  and  authorized  to 
transact  business,  but  there  is  a  brief  notice  in  the  December 
number  of  the  Insurance  Times  (1874),  indicating  that  the  pro- 
jected new  company  had  difficulties,  perhaps  on  account  of  its  in- 
ability to  raise  the  necessary  capital  of  $100,000,  with  which  it  was 
proposed  to  organize.  It  would  be  interesting  to  know  who  were 
the  promoters  of  the  enterprise  and  why  the  same  failed  in  its 
earliest  stages  without  having  had,  at  least,  a  fair  trial,  but  there  is 
no  record  of  the  names  of  those  who  made  this  second  attempt  to 
organize  a  Prudential  Insurance  Company  of  America,  and  thus, 
at  the  close  of  1874,  Industrial  insurance  was  still  a  probability, 
but  with  every  assurance  of  early  realization. 

The  report  of  Commissioner  Clarke  attracted  considerable 
attention  outside  of  Massachusetts,  and  came  to  the  notice  of 
Mr.  John  F.  Dryden,  who  for  some  years  had  given  considerable 
attention  and  thought  to  the  study  of  Industrial  insurance.  Mr. 
Dryden  must  needs  have  been  strongly  influenced  by  so  urgent  a 
plea  for  the  organization  of  an  Industrial  insurance  company, 
coming  from  a  source  free  from  bias  or  prejudice,  and  from  a 
man  fully  capable  of  dealing  with  so  intricate  and  highly  involved 
a  subject. 

It  is  often  argued  that  the  unstinted  praise  of  Industrial 
insurance,  its  methods  and  results,  on  the  part  of  the  press  in 


INDUSTRIAL  INSURANCE   IN  AMERICA   IN    1874.  53 

general,  and  the  insurance  press  in  particular,  is  due  to  the  fact 
that  the  Industrial  companies  are  advertisers  in  these  journals, 
and  that  the  latter  are,  therefore,  interested  advocates  or  special 
pleaders.  Unwarranted  as  this  opinion  is,  it  has  much  semblance 
of  truth,  in  that  newspaper  praise  is,  unfortunately,  too  often  the 
result  of  a  personal  interest,  while,  conversely,  newspaper  fault- 
finding is  too  often  the  result  of  personal  spite  or  prejudice  ;  but 
here  we  have  overwhelming  proof  that  before  a  single  Industrial 
company  was  organized  in  the  United  States,  the  more  intelli- 
gent insurance  press,  and  especially  the  Insurance  Times,  devoted 
columns  and  pages  to  the  discussion  of  the  new  form  of  life  in- 
surance, which  certainly  brought  not  a  cent  of  direct  compensation 
to  the  owners  or  managers  of  this  particular  journal ;  and  we 
find  the  leading  Insurance  Commissioner  of  the  United  States,  in 
1874,  making  a  special  plea  in  six  pages  of  his  report,  long  before 
an  Industrial  company  had  ever  paid  a  dollar  in  taxes  or  license 
fees  to  the  Department  of  Insurance  of  his  State.  Surely  this 
may  be  accepted  as  proof  that  the  system  was  early  recognized  as 
one  of  intrinsic  value,  and  that  it  was  advocated  because  it  was 
likely  to  meet  a  large  and  increasing  demand  for  life  insurance 
by  the  industrial  masses  of  that  State.  . 

As  another  illustration  of  the  earnestness  and  ability  with 
which  the  editor  of  the  Insurance  Times  advocated  the  establish- 
ment of  an  Industrial  insurance  company  in  the  United  States,  I 
quote  from  an  article  which  appeared  in  the  October  issue  of 
that  journal  for  1874,  which  brings  out  with  much  emphasis  the 
reasons  which  influenced  the  editor  to  devote  so  much  space  and 
time  to  the  advocacy  of  the  new  form  of  life  insurance  in  this 
country  : — 

' '  The  worthiest  members  of  this  class  [the  working  people] 
have  been  betrayed  continually  by  the  most  specious  inducements 
to  invest  their  little  spare  cash  in  associations  and  companies 
promising  the  most  alluring  profits  and  advantages  imaginable. 
Their  promises  have  been  broken,  and  those  that  trusted  in  them 
have  consequently  been  subjected  to  cruel  loss  and  privation." 
And  after  quoting  in  full  that  part  of  Mr.  Clarke's  report  which 
dealt  with  Industrial  insurance,  and  to  which  was  thus  given  a 
much-needed  amount  of  publicity  not  usually  accorded  to  a  pub- 
lic document,  the  article  continued:  "  There  is,  therefore,  a 
great  need  of  its  adaptation  to  the  wants  of  the  laboring  classes, 


54  HISTORY  OF  THE   PRUDENTIAL.  ' 

not  by  unreliable  parties,  but  by  those  who  would  worthily  com- 
mand the  entire  confidence  of  the  people.  *  *  *  *  To  answer 
the  purpose  indicated,  it  is  of  no  avail  to  introduce  agencies  of 
remote  companies,  however  excellent,  or  to  place  the  conduct  of 
this  business  in  the  hands  of  persons  not  recognized  by  the  pub- 
lic as  leading  men  of  the  highest  rank  in  the  insurance  world. 

*  *     *     #     The  schemes  already  afloat   and  worked  by  men 
without  repute,  have  only  beclouded  a  fine  opening,  and  rendered 
its  prosecution  more  difficult  by  the  disappointment  and  preju- 
dice which  have  been  engendered  by  unsatisfactory  experience. 

*  *     *     *     if  the  duty  of  supplying  the  need  of  life  insurance 
to  the  industrial  classes  were  undertaken  by  a  superior  under- 
writer, at  the  head  of  a  great  life  institution,  they  would  dissolve 
like  wreaths  of  mist  in  the  blaze  of  the  summer  sun." 

Thus,  after  years  of  agitation,  Mr.  English,  as  editor  of  the 
Insurance  Times,  had  reached  the  conclusion  that  it  no  longer 
was  merely  desirable  that  the  business  of  Industrial  insurance 
should  be  undertaken  by  a  responsible  company,  but  in  the  above 
sentence  he  speaks  of  the  ' '  duty  of  supplying  the  need  of  life 
insurance  to  the  industrial  masses, ' '  and  he  concludes  with  the 
hope  that  the  ' '  suggestion  of  Commissioner  Clarke,  which  almost 
assumes  the  form  and  urgency  of  an  appeal,  will  meet  a  fitting 
response  from  some  one  of  the  master  minds  of  the  life  under- 
writing fraternity." 


HOME    OFFICE    OF 

THE  PRUDENTIAL  FRIENDLY  SOCIETY, 


1875-1878. 


THE   PRUDENTIAL   FRIENDLY  SOCIETY,    1875.  55 


CHAPTER  V. 

THE   PRUDENTIAL   FRIENDLY  SOCIETY,    1875. 

It  is  self-evident  that  the  period  of  agitation  and  experiment 
had  passed,  and  that  the  time  for  the  foundation  of  an  institution 
on  the  basis  of  the  English  Friendly  Societies  and  the  British 
Prudential  had  come  with  the  new  year,  1875.  While  Stephen 
English  and  others  had  pleaded  and  argued  for  the  organization 
of  an  Industrial  company,  there  were  those  who  were  strongly 
in  favor  of  forming  an  institution  more  in  harmony  with  the 
principles  and  practice  of  the  Manchester  Order  of  Unity  and 
the  Royal  L,iver  Friendly  Society,*  which  combine  a  provision  for 
aid  in  sickness  with  assurance  for  a  sum  sufficient  'for  burial  ex- 
penses in  case  of  death.  Many  factors  contributed  to  favor  the 
latter  form,  not  the  least  of  which,  if  not  the  most  important, 
must  be  considered  the  large  amount  of  sickness  prevailing  in  the 
large  cities  of  the  United  States  during  the  early  seventies.  As 
a  rule  the  mortality  was  above  25  per  1,000  of  population,  often 
rising  as  high  as  30  per  1,000  during  a  single  year.  The  larger  \ 
part  of  this  excessive  mortality  was  caused  by  zymotic  diseases, 
and  the  disease  prevalence  was  in  general  far  in  excess  of  that  of 
the  present  time. 

What  was  generally  true  of  most  of  the  large  cities  of  the 
East  was  true  in  particular  of  Newark,  N.  J.,  which  at  this  time 
had  a  population  of  about  120,000,  and  held  high  rank  as  one  of 
the  most  important  manufacturing  centres  in  the  United  States. 
The  average  death-rate  of  Newark  for  the  period  1872-' 75  was 
31  per  1,000  of  population.  Smallpox,  typhoid  fever,  diphtheria, 
scarlet  fever,  and  especially  consumption  were  all  excessively 
prevalent  during  this  period.  While  the  general  mortality  was 
high,  the  mortality  at  the  younger  ages  was  even  more  pro- 
nounced, the  increase  in  the  death-rate  at  ages  under  ten,  for 

*  This  society  no  longer  transacts  a  sickness  insurance  business. 


56  HISTORY  OF  THE  PRUDENTIAL. 

instance,  having  been  largely  in  excess  of  the  increase  in  the 
population. 

Taking  into  consideration  the  fact  that  Newark  was  almost 
exclusively  a  manufacturing  city,  with  a  large  proportion  of  its 
population  depending  on  weekly  wages,  it  is  quite  clear,  to  any 
one  who  has  at  all  studied  the  relation  of  an  excessive  mortality 
to  social  welfare,  that  it  was  here,  as  in  England  (in  Liverpool, 
Birmingham  and  Manchester),  that  the  demand  for  Industrial 
insurance  should  first  manifest  itself  in  a  most  emphatic  form, 
and,  as  we  shall  point  out  more  clearly  later  on,  it  was  from  the 
large  employers  of  labor  that  the  first  direct  assistance  came  in 
the  formation  of  a  society  and  later  on  of  a  company  as  a  remedy 
for  the  ills  resulting  from  social  burdens  beyond  the  strength  of 
the  average  individual  workman. 

It  is  much  to  be  regretted  that  data  are  wanting  as  regards 
the  actual  amount  of  pauperism  and  poverty  prevailing  in  Newark 
at  this  period,  but,  from  census  returns  and  other  fragmentary 
data,  it  is  evident  that  pauper  funerals  were  exceedingly  common 
in  Newark  during  the  early  seventies.  For  New  York  City, 
where  conditions  were  even  worse  than  they  were  in  Newark, 
actual  data  as  to  pauper  funerals  are  available,  showing  that  the 
rate  of  such  funerals  per  10,000  of  population  was  33.1  during 
1 8 70-' 74,  against  an  average  rate  of  only  22.0  during  the  five 
years  1895-' 99.  Hence,  it  is  shown  that  not  only  were  pauper 
funerals  exceedingly  common  during  the  years  preceding  the 
establishment  of  Industrial  insurance,  but  since  that  date  a 
material  reduction  in  number  has  taken  place. 

Such  conditions  as  have  been  pointed  out  are  likely  to  prove 
an  incentive  for  the  development  of  plans  tending  towards  im- 
provement by  the  application  of  insurance  principles,  which  aim 
to  do  away  with  the  necessity  of  a  demand  for  public  charity  from 
an  otherwise  able  and  intelligent  body  of  workingmen,  making 
worthy  efforts  to  solve  life's  problems  in  their  own  way  and 
within  the  limits  of  their  means. 

It  was  to  Newark  that  Mr.  John  F.  Dryden  had  come,  in 
1873,  with  the  purpose  of  launching  his  new  scheme  of  working- 
^  men's  insurance.  Surely  he  could  not  have  selected  a  more 
appropriate  locality,  a  better  city  for  a  trial  of  his  new  ideas  in 
life  insurance  and  finance,  and  a  more  promising  field  for  the 
first  application  of  English  principles  of  Industrial  insurance  to 


THE   PRUDENTIAL   FRIENDLY  SOCIETY,    1875.  57 

American  social  and  economic  conditions.  Time  has  proved  that 
the  selection  of  Newark  was  a  most  wise  one  ;  time  has  proved 
that  Mr.  Dryden  was  right  in  his  conception  of  the  future  possi- 
bilities of  Industrial  insurance  on  American  soil. 

Mr.  Dryden  had  for  some  years  devoted  much  time  and 
study  to  the  question  of  life  insurance  for  workingmen  and  their 
families,  his  attention  to  this  branch  of  the  business  having  been 
attracted  by  the  report  of  Klizur  Wright  on  the  methods  and 
condition  of  the  British  Prudential.  On  digesting  these  com- 
mentaries of  Mr.  Wright  and  Mr.  Gladstone,  Mr.  Dryden  did  not 
take  their  conclusions  for  granted,  but  procured  all  the  reports 
and  data  of  the  Knglish  company  and  the  British  Friendly  Socie- 
ties, and  after  a  careful  study  of  the  facts  concluded  that  Mr. 
Harben  and  the  Knglish  people  were  right,  and  that  Mr.  Wright 
and  Mr.  Gladstone  were  in  error. 

Satisfied  that  the  business  was  deserving  of  a  trial,  when 
modified  to  meet  American  social  and  economic  conditions,  Mr. 
Dryden  first  submitted  his  plans  to  some  people  in  his  native 
State  (Maine),  but  no  encouragement  was  given  for  a  practical 
demonstration  of  his  ideas.  Not  discouraged,  he  had  come  to 
Newark  in  1873,  and,  after  interesting  a  few  people  in  the  matter, 
had  a  bill  passed  by  the  Legislature,  chartering  The  Widows'  and 
Orphans'  Benefit  Society,  but,  as  has  been  pointed  out,  nothing 
substantial  came  from  this  effort,  an  effort  too  much  in  harmony 
with  the  prevailing  idea  of  providing  workingmen' s  insurance  on 
the  "Bund"  or  "Union"  plan.  After  a  brief  experiment,  it 
was  found  necessary  to  alter  the  original  plans,  and  in  the  spring 
of  1875  tne  charter  of  The  Widows'  and  Orphans'  Benefit  Society 
was  amended  so  that  the  name  of  the  society  was  changed  to 
that  of  The  Prudential  Friendly  Society,  which,  in  1877,  by 
another  amendment  became  The  Prudential  Insurance  Company 
of  America. 

Among  the  incorporators  of  the  society  were  many  leading 
merchants  and  manufacturers,  who,  according  to  a  sketch  in  the 
Newark  Standard,  ' ( had  been  daily  called  upon  for  subscriptions 
to  bury  the  poor  or  furnish  aid  in  sickness  and  distress."  It 
was  well  for  the  new  enterprise  that  men  of  exceptional  ability 
and  known  integrity  and  experience  should  have  been  drawn  into 
the  formation  of  the  new  insurance  project,  since  the  frequent 
failures  of  so-called  Aid  Societies  or  Fraternal  Societies,  parading 


58  HISTORY   OF  THE   PRUDENTIAL. 

under  the  guise  of  high-sounding  titles  and  often  supported  by 
names  well  known  in  the  world  of  finance  and  commerce,  had 
only  too  often  fallen  far  short  of  their  promises  and  shamefully 
betrayed  a  most  sacred  trust. 

It  will  be  recalled  in  this  connection,  how  earnestly  and  per- 
sistently the  Insurance  Times,  in  its  frequent  articles  in  favor  of 
the  organization  of  an  Industrial  insurance  company,  had  insisted 
that  ' '  It  is  all-important  that  whoever  undertakes  it  should  stand 
so  high  as  to  command  the  entire  confidence  of  the  people,  and 
be  able  to  gather  about  him  a  corps  of  coadjutors  and  subordi- 
nates who  would  work  with  him  with  intelligence,  zeal  and 
industry,  incapable  of  despair,  flagging  or  failure." 

It  was,  therefore,  most  fortunate  for  the  cause  of  genuine 
workingmen's  insurance  that  from  the  outset  the  new  organiza- 
tion had  the  moral  and  material  support  of  the  very  best  com- 
mercial and  financial  element  in  the  city  of  Newark.  In  a 
notice  of  the  actual  commencement  of  business  operations  by 
The  Prudential  Friendly  Society,  the  Newark  Evening  Courier  of 
November  13,  1875,  referred  to  the  managers  of  the  society  as 
follows  :  ' '  The  gentlemen  who  have  the  management  of  this 
important  and  humane  enterprise  are  too  well  known  in  Newark 
to  require  our  endorsement.  Their  names  are  a  synonym  for 
financial  strength  and  integrity,  and  our  people  know  that  funds 
entrusted  to  an  organization  which  is  under  such  control  will  be 
guarded  with  sacred  care."  The  Newark  Register  of  the  same 
date  referred  to  the  society  in  the  following  words  :  ' '  One  of  the 
most  gratifying  facts  connected  with  this  society  is  its  strength 
and  security,"  and  it  "  may  be  said  to  be  founded  upon  a  rock" — 
a  rather  curious  coincidence,  considering  the  fact  that  the  motto 
of  the  Company,  "The  Prudential  has  the  strength  of  Gibraltar," 
became,  in  course  of  time,  a  household  word. 

While  the  charter  of  the  society  had  been  supplemented  on 
February  18,  1875,  which  must  be  considered  the  date  on  which 
Industrial  insurance  had  its  beginnings  in  the  United  States,  it 
was  not  until  November  10,  1875,  that  the  actual  business  opera- 
tions commenced,  and  it  was  on  this  day  that  the  first  application 
was  written  on  the  life  of  the  then  cashier  of  the  German  Bank, 
Mr.  W.  R.  Drake.  The  name  of  John  F.  Dryden,  the  first 
secretary  of  the  society,  appears  as  a  witness  to  the  application, 
which  is  reproduced  in  full  on  the  opposite  page. 


ATION. 


THE  PRUDENTIAL  FRIENDLY  SOCIETY 


,:EC    1ST.    J". 
•M;I>  BY  THK  AWLICANT. 


i 


FIRST   APPLICATION   RECEIVED   BY 

THE;  PRUDENTIAL  FRIENDLY  SOCIETY, 

NOVEMBER    IO,    1875. 


^J/^ 


THE   PRUDENTIAL   FRIENDLY  SOCIETY,    1875.  59 

Before  taking  account  of  the  events  following  this  actual 
commencement  of  business  operations,  it  is  necessary  to  consider 
briefly  the  general  facts  relating  to  the  period  which  had  elapsed 
from  the  time  the  charter  of  The  Widows'  and  Orphans'  Friendly 
Society  had  been  amended  on  February  i8th,  to  November  icth, 
when  the  first  application  for  membership  in  The  Prudential 
Friendly  Society  was  made. 

During  the  month  of  January,  1875,  the  discussion  and 
public  consideration  of  Mr.  Wright's  savings-bank  plan  contin- 
ued, and  much  attention  was  given  to  his  many  publications  on 
the  subject,  especially  his  bitter  attacks  on  regular  level-premium 
life  insurance.  The  Boston  Board  of  Trade  took  the  matter  into 
consideration  and  proposed  ' '  to  inaugurate  a  new  movement  in 
life  insurance,"  which,  had  it  succeeded,  it  is  not  too  much  to 
say,  would  have  made  Industrial  insurance  unnecessary  and  im- 
possible. The  Board  of  Trade  unanimously  approved  the  plan  of 
Mr.  Wright  and  recommended  that  the  same  should  be  tried  on 
the  ground  that  ' '  the  people  who  most  need  life  insurance  can  not 
well  afford  the  luxury  of  the  agency  expenses  of  the  present  sys- 
tem." It  will  be  observed  that  this  was  in  direct  opposition  to 
Mr.  Wright's  earlier  plea,  that  the  agency  system  was  indis- 
pensable to  the  extension  of  life-insurance  principles  to  the  masses. 
It  had  been  further  recognized  by  this  time,  in  the  words  of  the 
Monitor,  that  ' '  any  man  who  knows  anything  about  life-insur- 
ance companies  understands  perfectly  well  that  soliciting  agents 
are  their  motive  power."  While  something  was  to  be  said  in 
favor  of  Mr.  Wright's  scheme,  the  people  at  large,  and  especially 
those  best  informed  in  the  science  and  practice  of  life  insur- 
ance, were  opposed  to  his  project  on  the  ground  of  its  utter 
impracticability,  and  the  opposition  is  best  expressed  in  the  words 
of  a  member  of  the  Massachusetts  L/egislature,  who,  in  explana- 
tion of  the  reason  why  the  Legislature  had  refused  Mr.  Wright  a 
charter  for  his  proposed  company,  said  that  "  Mr.  Wright's  plan  /\  Jfa 
was  looked  upon  as  impracticable,  very  ingeniously  contrived, 
but  wholly  without  motive  power,"  since,  as  has  been  stated,  it 
was  proposed  to  employ  no  agents  to  acquaint  the  public  with  the 
merits  of  the  scheme  by  a  direct  canvass,  such  as  is  made  by 
Ordinary  and  Industrial  companies. 

While  this  discussion  was  engaging  the  attention  of  the  people 
in  the  Kastern  United  States,  an  effort  was  made  in  Hamilton, 


60  HISTORY   OF  THE   PRUDENTIAL. 

in  the  province  of  Ontario,  Canada,  to  organize  an  Industrial 
company  on  the  plan  of  the  British  Prudential,  by  the  name 
of  The  Industrial  and  Commercial  L,ife  Insurance  Company, 
but,  as  far  as  I  have  been  able  to  learn,  practically  nothing 
was  accomplished,  and  no  actual  business  was  ever  transacted. 
This  fact  is  of  interest  merely  as  an  indication  of  the  growing 
demand  for  Industrial  insurance  in  all  parts  of  the  country. 
The  great  English  company  continued  to  attract  attention  on 
this  side  of  the  Atlantic,  and  its  •  success  as  recorded  in  the 
insurance  journals  must  have  offered  tempting  inducements  to 
American  insurance  managers  to  try  the  same  experiment. 
The  report  of  the  British  company  for  the  year  1874  had  stated 
that  there  had  been  issued  during  that  year  the  almost  incompre- 
hensible number  of  888,758  Industrial  policies,  against  646,377 
policies  issued  during  1873.  The  returns  of  the  company  were 
extensively  commented  upon,  and  led  the  Insurance  World  (1875, 
p.  82)  to  remark  that  the  system  of  Industrial  insurance  is  yet 
' '  in  its  chrysalis  state  in  this  country, ' '  which  was  strictly  true, 
for  Mr.  Dryden  and  his  associates  were  working  almost  day  and 
night  to  perfect  the  organization  of  a  society  which  in  time  was  to 
prove  the  first  successful  Industrial  insurance  company  of  Ameri- 
can origin  to  be  operated  on  the  plan  of  the  British  Prudential. 

As  has  been  stated,  Mr.  Dryden  had  had  the  subject  of 
Industrial  insurance  under  consideration  for  some  years,  and  had 
not  only  made  himself  familiar  with  the  leading  principles  and 
features  of  the  system  of  the  British  Prudential,  but  he  had  also 
carefully  considered  and  studied  the  plans  of  the  English  Friendly 
Societies,  and  in  particular  the  Manchester  Order  of  Unity,  and 
the  Trading  Societies,  like  the  Royal  Liver,  of  Liverpool,  the 
latter  of  which  made  a  specialty  of  burial  insurance  for  all  the 
members  of  a  family.  With  the  object  of  developing  in  the  United 
States  a  new  form  of  workingmen's  insurance,  which  would  com- 
bine all  the  virtues  of  the  old  plans,  while  eliminating,  as  far  as 
possible,  the  weak  points,  which  had  been  the  cause  of  so  many 
disastrous  failures,  Mr.  Dryden  secured  all  the  available  informa- 
tion from  England,  entering  at  the  same  time  into  correspondence 
with  Neison  and  Ratcliffe,  the  highest  authorities  on  Friendly 
Society  practice  of  this  period. 

The  one  broad  fact  which  remained  with  Mr.  Dryden  as 
the  result  of  his  study  and  investigation  must  have  been  the 


THE  PRUDENTIAL  FRIENDLY  SOCIETY,    1875.  6l 

-  conclusion  pre-eminent  in  the  minds  of  all  English  students  of 
the  subject  of   Friendly  Society  practice  and   finance,  namely, 
that  an  actuarial  basis  was  the  first  requisite  to  make  possible  the 

/(  success  of  an  undertaking  of  this  kind,  and  with  this  thought  in 
I  mind,  Mr.  Dry  den  entered  into  communication  with  Mr.  John  E. 

*  Clark,  Professor  of  Mathematics  at  Yale  College,  who  seems  to 
have  made  himself  thoroughly  familiar  with  the  actuarial  and 
financial  basis  of  life  contingencies. 

From  letters  of  Mr.  Clark  addressed  to  Mr.  Dryden,  during 
the  months  preceding  the  actual  commencement  of  business  opera- 
tions, I  make  a  few  extracts,  as  likely  to  prove  of  more  than 
passing  interest  and  importance  to  the  student  of  Industrial 
insurance  history. 

In  his  first  letter  to  Mr.  Dryden,  dated  March  26,  1875,  Mr. 
Clark  referred  to  the  dearth  of  information  on  the  subject  of  insur- 
ance, and  especially  on  sickness  and  mortality,  in  the  possession 
of  Yale  College,  and  intimates  that  his  knowledge  of  the  subject 
has  been  practically  confined  to  a  study  of  Neison's  work  on 
Vital  Statistics.  Influenced,  no  doubt,  by  the  investigations  of 
Neison,  the  great  value  of  which  is  recognized  even  at  the 
present  time,  Mr.  Clark  seems  to  have  devoted  considerable  atten- 
tion to  the  question  of  the  possibility  of  successfully  transacting  a 
sickness  insurance  business,  and  in  a  letter  dated  April  26th,  he 
reported  to  Mr.  Dryden  that  in  consequence  of  his  preliminary 
investigations  he  could  safely  recommend  the  adoption  of  a  plan 
for  the  transaction  of  a  sickness,  burial  and  pension  scheme,  and 
that,  "with  strict  attention  to  well-established  principles  and  to^ 
detail  of  administration,  it  can,  in  my  opinion,  be  transacted  /  $/ 
safely,  and,  if  the  demand  for  it  be  good,  with  a  fair  return  to  the 
stockholders."  He,  however,  recognized  the  inadequacy  of  the 
data  at  his  command,  and  in  reference  to  sickness  benefits  stated 
that,  ' '  by  going  into  operation  cautiously  upon  the  basis  of  this 
experience,  you  will  be  able  to  gather  in  your  office  an  experience 
of  your  own,  which  will,  after  a  time,  furnish  such  checks  and 
modifications  as  may  be  desirable, ' '  and  in  still  another  letter, 
dated  April  3oth,  Mr.  Clark  repeated  his  words  of  caution  in 
reference  to  the  sickness  branch  of  the  business,  stating  that 
' '  this  branch  of  the  business  should  be  particularly  studied. ' '  Sub- 
sequent experience  proved  for  this  country,  as  it  had  been 
true  for  England,  that  a  sickness  benefit  business  can  not  be 


62  HISTORY  OF  THE  PRUDENTIAL. 

safely  transacted  by  an  insurance  company.  It  is  absolutely  im- 
possible to  guard  against  sham  sickness,  imposition  and  fraud 
in  other  directions,  and  all  calculations,  on  no  matter  how  ac- 
curate a  basis,  will  prove  inadequate  in  practice.  In  conse- 
quence, a  few  years  later,  The  Prudential  Insurance  Company 
discontinued  the  transaction  of  sickness  insurance,  after  this 
branch  of  the  business  had  been  given  a  sufficiently  extensive 
trial  to  prove  that  it  could  not  be  safely  and  profitably  transacted, 
and  that  the  demand  for  this  form-  of  insurance  protection  was 
fmuch  less  than  had  been  anticipated,  increasing  preference  being 
given  to  life  insurance  for  burial  or  investment  purposes. 

Another  point  receiving  considerable  attention  before  the 
actual  business  operations  had  commenced,  was  the  probable  and 
proper  expense-rate  of  a  life-insurance  business  to  be  transacted  on 
the  weekly-  or  monthly-payment  plan,  and,  while  this  question  in  a 
manner  demanded  considerable  actuarial  consideration  and  treat- 
ment, it  was  still  very  largely  a  practical  one,  demanding  the 
taking  into  account  of  the  conditions  under  which  the  business 
had  to  be  carried  on,  namely,  by  a  house-to-house  canvass,  and 
the  subsequent  collection  of  weekly  premiums  from  the  houses  of 
the  insured.  Mr.  Dryden  from  the  outset  insisted  upon  a  load- 
ing of  the  premiums  sufficient  for  the  safe  transaction  of  the  busi- 
ness, holding  to  the  belief  that  ' '  it  would  be  very  easy  to  make 
an  equitable  return  to  the  policy-holder  if  an  overcharge  had 
been  made, ' '  and  he  further  especially  insisted  upon  safety  and 
permanency,  rather  than  yield  upon  a  point  which  might  have 
brought  more  rapid  success  during  the  first  few  years,  but  have 
imperiled  the  future  existence  of  the  society  ;  and  in  these  views, 
Mr.  Dryden  was  fully  sustained  by  Mr.  Clark,  who,  after  a 
lengthy  discussion,  conceded  that — "  I  shall  proceed  to  carry  out 
your  views  cheerfully,  and  the  latter,  I  am  sure,  do  not  appear  to 
me  in  any  sense  unreasonable  from  your  point  of  view  ' ' ;  and  in 
closing  his  letter  of  June  i6th,  Mr.  Clark  added  that  "  in  any  case 
of  doubt  in  such  matters  action  should,  of  course,  keep  wrell  on 
the  side  of  safety,  and  this  maxim  I  have  constantly  considered 
in  my  recent  calculations. ' ' 

In  a  letter  dated  June  4th,  Mr.  Clark  makes  reference  to  Mr. 
Dryden 's  careful  selection  of  men  of  ability  and  prominence  as 
directors  and  stockholders  in  the  new  enterprise,  a  matter  of  the 
greatest  possible  importance,  and  one  of  the  formative  influences 


THE  PRUDENTIAL   FRIENDLY  SOCIETY,    1875.  63 

making  for  the  future  success  of  the  company.  Mention  has 
already  been  made  of  the  fact  that  among  the  incorporators  of  the 
society  were  men  of  wealth  and  influence,  merchants  and  manu- 
facturers of  the  city  of  Newark,  and  Mr.  Clark  incidentally  refers 
to  the  matter  in  stating  that  ' '  yo'ur  plan  for  reaching  the  different 
industries  through  the  selection  of  your  directors  seems  a  good 
one,  and  you  do  not  seem  to  be  unwise  in  not  hastening  too  much 
the  completion  of  your  Board. ' '  Anxious  as  Mr.  Dry  den  must 
have  been  to  commence  active  operations,  he,  nevertheless,  with 
a  characteristic  spirit  of  patience  and  conservatism,  refrained 
from  making  haste  at  the  most  critical  period  of  the  history  of 
the  society,  which  was  to  be  the  future  Prudential  Insurance 
Company  of  America. 

It  is  thus  apparent  that  every  step  taken  by  Mr.  Dryden 
had  been  carefully  considered,  and  it  was  not  until  July  that  Mr. 
Clark  was  able  to  forward  the  completed  calculation  of  rates  for 
the  sickness  and  annuity  branch  of  the  business,  and  on  July  loth 
the  life-rates  for  the  burial  branch.  In  transmitting  his  sickness 
calculations  he  once  more  emphasized  the  importance  of  dealing 
cautiously  with  this  part  of  the  business,  and  at  the  same  time 
pointed  out  most  of  the  observed  dangers  pertaining  to  this  form 
of  insurance  as  carried  on  by  the  Friendly  Societies  in  England. 
Mr.  Clark  carefully  went  over  the  whole  ground,  so  ably  discussed 
by  Finlaison,  Neison  and  others,  and  concluded  his  recommenda- 
tions with  the  advice  that  ' '  an  actuarial  valuation  of  each  branch  v 
of  the  business  should  be  made,  if  possible,  once  per  annum,  and 
that  the  first  of  these  valuations  should  be  made  at  least  within,  V 
a  year  after  the  business  had  well  gotten  under  way. ' '  To  this 
advice,  which  is  clearly  indicative  of  a  thorough  comprehension 
on  the  part  of  Mr.  Clark  of  the  difficulties  incident  to  the  suc- 
cessful transaction  of  an  Industrial  insurance  business,  he  added 
the  further  advice,  which  deserves  to  be  remembered  as  the  very 
foundation  of  the  massive  and  colossal  structure  of  present-day 
Industrial  insurance,  and  for  the  disregard  of  which  so  many 
thousands  of  so-called  fraternal  or  co-operative  schemes  have 
come  to  an  untimely  end:  "Meanwhile,  as  at  all  times,  your 
directors  should  be  impressed  with  the  importance  of  keeping 
sacredly  the  proper  reserve  on  all  your  policies,  so  that  if  your 
business  is  successful,  as  I  most  sincerely  hope  it  may  be,  you 
may  secure  constantly  increasing  confidence;  and  if  in  the  worst 


64  HISTORY   OF  THE   PRUDENTIAL. 

event  it  should  chance  to  be  at  all  unsuccessful,  it  may  at  least 
not  end  in  dishonor. ' '  Such  were  the  foundation  principles  on 
which  Industrial  insurance  in  the  United  States  was  established 
by  The  Prudential,  which  in  a  brief  quarter  of  a  century  became 
known  to  every  one,  old  and  young,  as  "  the  Company  which  has 
the  strength  of  Gibraltar. ' ' 

Another  evidence  of  the  painstaking  efforts  of  Mr.  Dryden, 
in  giving  consideration  to  every  possible  theoretical  or  practical 
aspect  of  the  problem  of  workingmen's  insurance,  is  found  in  a 
letter  of  Mr.  Clark,  dated  August  24,  1875.  Mr.  Dryden  seems 
to  have  called  Mr.  Clark's  attention  to  an  article  in  the  New  York 
Tribune  on  ' '  L,ife  Insurance  for  Workingmen, ' '  which  may  pos- 
sibly have  been  suggested  by  an  address  of  Blizur  Wright  on 
' '  Life  Insurance  for  the  Poor, ' '  delivered  at  the  annual  meeting 
of  the  National  Social  Science  Association  at  Detroit,  Mich.,  on 
May  13,  1875.  In  the  Tribune  article  a  strong  argument  had 
been  made  for  life  insurance  for  the  masses,  and  I  can  not  but 
think  it  of  value  to  give  a  few  extracts  from  a  now  inaccessible 
plea  for  workingmen's  insurance  on  the  Industrial  plan  in  the 
United  States. 

The  Tribune  had  said  as  follows  :  ' '  The  policies  that  work- 
men take  at  best  are  small,  and  the  payments  of  premiums  are 
divided  as  much  as  possible  ;  hence  the  shop  and  the  factory  offer 
an  unprofitable  ground  to  the  canvassers  [for  Ordinary  insurance] , 
who  get  a  commission  on  paid  premiums  only,  consequently  life 
insurance  is  not  brought  home  to  the  workingman  by  personal 
effort,  as  it  is  to  other  classes  in  this  country.  This,  then,  is  the 
difficulty  to  be  surmounted.  That  it  is  not  impossible  is  shown 
by  the  enormous  business  of  an  English  company  [the  Pruden- 
tial] which  makes  workingmen's  policies  a  specialty.  In  Great 
Britain  the  insurance  companies  have  found  out  how  to  insure 
the  workingman  ;  our  companies  have  not.  In  these  times,  while 
the  business  of  life  insurance  is  dull,  and  agents  find  it  hard  work 
to  earn  a  living,  it  might  be  worth  while  to  study  the  system 
adopted  abroad.  Insurance  for  workingmen  in  this  country  offers 
an  opening  into  fresh  fields  and  pastures. ' ' 

In  his  remarks  at  the  Detroit  meeting  of  the  Social  Science 
Association,  Mr.  Wright  had  discussed  the  subject  from  an  en- 
tirely different  standpoint,  expressing  the  belief  that,  by  means 
of  his  family  bank,  it  was  possible  to  introduce  ' '  self -solicited ' ' 


THE  PRUDENTIAL  FRIENDLY  SOCIETY,    1875.  65 

life  insurance  for  the  industrial  masses  of  the  United  States.  As 
has  previously  been  pointed  out,  his  efforts  in  this  direction  proved 
a  complete  failure,  and  such  companies,  especially  the  Provident 
Savings  Assurance  Society,  as  adopted  his  suggestion  to  trans- 
act business  without  agents,  were  soon  compelled  to  abandon  the 
plan  and  revert  to  the  universal  method  of  soliciting  insurance  by 
direct  personal  canvass,  the  necessity  of  which  had  been  pointed 
out  as  early  as  1853  by  Tuckett  in  his  insurance  journal,  to  which 
previous  reference  has  been  made.  However,  there  was  one 
remark  of  Mr.  Wright  which  deserves  to  be  placed  on  record,  and 
that  is,  his  opinion  that,  ' '  to  adapt  life  insurance  to  the  poor, 
it  should  be  reduced  to  the  utmost  simplicity,  so  as  to  be  within 
the  comprehension  of  the  humblest  capacity. ' '  It  may  safely  be 
said  for  Industrial  insurance  that  it  fully  and  completely  came  up 
to  this  demand,  and  to  this  fact  it  owes  no  small  amount  of  the 
success  which  has  since  been  attained. 

As  an  indication  of  the  small  extent  to  which  life  insurance 
had  been  made  accessible  to  the  masses,  it  may  be  pointed  out 
that,  according  to  a  report  made  in  1875  by  the  Massachusetts 
Bureau  of  L,abor  Statistics,  *  out  of  397  workingmen's  families 
which  made  returns  of  their  expenditures,  only  a  single  working- 
man's  family  paid  an  annual  premium  of  $18  for  insurance 
purposes.  While  practically  nothing  was  expended  for  life 
insurance,  a  disproportionate  part  of  the  income  was  expended 
for  charities  and  societies,  and  it  is  not  too  much  to  say  that  by 
1875,  workingmen's  insurance  was  practically  limited  to  secret 
organizations  or  co-operative  benefit  societies,  most  of  which,  at 
best,  provide  only  temporary  insurance  for  a  small  number,  who 
receive  benefits  during  the  existence  of  the  organization,  an  ex- 
istence which  is  usually  limited  to  a  generation  as  its  maximum 
period  of  possible  usefulness. 

In  marked  contrast  to  the  investigations  in  Massachusetts  in 
1875,  the  investigations  made  by  the  Aldrich  Senate  Finance 
Committee  on  * '  Retail  Prices  and  Wages, ' '  and  also  by  the 
Michigan  and  Indiana  State  Bureaus  of  L,abor,  prove  that,  at  the 
present  time,  life  insurance  forms  a  very  considerable  element  in 
the  expense-rate  of  workingmen's  families,  and  this  result,  it  may 
with  confidence  be  asserted,  must  be  attributed  largely  to  the 

*  Mass.  Labor  Report,  1875,  p.  435. 


66  HISTORY  OF   THE   PRUDENTIAL. 

missionary  work  carried  on  by  Industrial  insurance  companies  in 
behalf,  not  only  of  Industrial  insurance,  but  also  of  other  forms 
of  insurance,  savings  and  thrift ;  and  it  may  not  be  out  of  place 
in  this  connection  to  state  that  in  1875,  although  there  were  then 
in  the  State  of  Massachusetts  some  720,639  of  savings-banks 
depositors,  with  an  average  deposit  of  $330,  it  was  officially 
pointed  out  by  the  Labor  Commission  of  that  State  that  ' '  the 
fact  remains  that  the  English  Government  aids  fewer  paupers  in 
proportion  to  population  than  our  own."  * 

Attention  may  here  properly  be  called  to  a  point  of  more 
than  passing  importance,  in  view  of  present-day  attacks  on 
Industrial  insurance  as  a  method  by  which  the  poor  are  encour- 
aged to  expend  extravagant  sums  for  funeral  purposes.  While 
the  charge  in  itself  is  so  absurd  that  it  hardly  needs  refuta- 
tion, in  view  of  the  self-evident  fact  that  the  amounts  realized 
are,  as  a  rule,  hardly  sufficient  to  meet  the  funeral  expenses  and 
the  cost  of  the  last  illness,  it  may  be  of  interest  to  call  attention 
to  an  article  in  the  September  number  of  the  Insurance  Times  for 
1875,  in  which  the  question  of  funeral  expenses  and  funeral  pomp 
was  discussed  and  from  which  I  make  the  following  extract :  "It 
is  impossible  to  pay  a  visit  to  any  of  our  cemeteries  when  funerals 
are  going  on,  without  experiencing  not  only  a  kind  of  shudder  at 
the  whole  paraphernalia  of  the  undertaking  business,  but  also  a 
feeling  of  pious  grief  at  the  thought  of  the  silly  trammels  of  cus- 
tom, in  which  all  classes  of  society  are  bound,  in  the  matter  of 
funeral  pomp ;  and  the  wanton  extravagance  which  sets  up  in 
admired  disorder,  full  of  endless  repetitions,  monumental  effigies, 
and  thousands  of  silly  sentiments  embodied  in  stone  and  marble, 
some  of  which  are,  even  like  the  inverted  torch,  purely  heathen." 

This  article  is  of  exceptional  interest  in  view  of  latter- 
day  discussions  in  which  the  charge  has  been  made  that  the  vast 
extension  of  Industrial  insurance  has  been  responsible  for  the 
asserted  increase  in  funeral  pomp  and  funeral  expenditure.  It 
will  be  observed  that  before  a  single  Industrial  policy  had  been 
written  funeral  expenditures  were  sufficiently  extravagant  to  call 
for  public  condemnation,  and  that  it  is  therefore  shown  that 
public  opposition  to  funeral  extravagance  antedates  the  estab- 
lishment of  Industrial  insurance  in  the  United  States. 

*  Mass.  Labor  Report,  1875,  p.  211. 


THE   PRUDENTIAL   FRIENDLY  SOCIETY,    1875.  67 

By  October,  1875,  three-quarters  of  the  year  had  passed,  and, 
as  far  as  the  public  knew,  no  definite  steps  had  been  taken  to 
establish  an  Industrial  insurance  company  in  the  United  States. 
There  is,  however,  record  of  an  attempt  made  in  Washington, 
D.  C. ,  during  the  early  part  of  the  year,  when  an  effort  seems  to 
have  been  made  to  establish  an  Industrial  insurance  company,  but 
like  the  Industrial  and  Commercial,  of  Hamilton,  Ontario,  noth- 
ing substantial  seems  to  have  been  the  result,  and  there  is  no 
proof  that  the  proposed  company  ever  actually  transacted 
business. 

The  Insurance  Times,  with  a  persistency  fully  worthy  of  the 
cause,  continued  its  pleadings  in  favor  of  such  an  undertaking, 
and  in  the  October  number  for  1875  appeared  another  excellent 
article,  under  the  title  "  L,ife  Insurance  for  Those  Who  Need  It 
Most, ' '  from  which  I  quote  a  few  passages  :  ' '  Who  need  life  insur- 
ance most  ?  The  poor,  or  the  rich  ?  The  families  who  are  entirely 
dependent  upon  the  daily  or  weekly  earnings  of  their  head,  or 
those  who  have  other  sources  of  maintenance  ?  L,ife  insurance  is 
good  for  the  rich  and  the  'well-to-do,'  but  it  should  be  looked 
upon  as  indispensable  to  the  poor.  The  complaint  is  general, 
however,  that  life  insurance  fails  to  reach  those  who  most  need  it, 
and  upon  whom  it  is  calculated  to  confer  the  greatest  benefit. 
The  family  of  the  poor  man,  that  ought  to  be  protected  by  life  j 
insurance,  is  seldom  or  never  shielded  by  a  life  policy." 

Referring  to  the  efforts  that  had  been  made  to  transact  an 
insurance  business  by  means  of  ' '  Bunds ' '  or  similar  organiza- 
tions, the  Insurance  Times  stated  that  "Some  abortive  efforts 
have  been  made  in  this  direction,  but,  as  we  predicted  from  the 
first,  they  failed  and  came  to  nothing,  because  they  were  not 
made  by  persons  of  the  right  quality  and  calibre.  We  regret,  for 
this  reason,  to  see  men  unequal  to  the  task  undertake  it ;  and  to 
see  others,  whose  talents,  standing  and  influence  fit  them  for  the 
work,  waste  their  powers  in  attempting  the  achievement  of  impos- 
sibilities. *#**!£  such  gifted  and  eminent  actuaries  as 
Klizur  Wright,  Sheppard  Homans,  and  some  few  other  leading 
life  insurance  minds,  would  employ  their  great  knowledge,  trained 
ability  and  wide  influence,  to  promote  the  extension  of  life  insur- 
ance to  the  hard-working  and  industrial  classes,  instead  of  devot- 
ing their  talents  and  labor  to  the  development  and  introduction  of 
pet  theories,  however  ingenious  and  attractive,  they  would  render 


68  HISTORY  OF  THE   PRUDENTIAL. 

humanity  a  great  and  lasting  service,  in  the  blessings  of  which 
millions  would  be  partakers  for  ages  to  come. 

' '  The  regular,  rapid  and  solid  growth  of  a  system  of  indus- 
trial insurance,  or  life  insurance  for  the  poor,  would  have  an 
almost  unlimited  scope  and  usefulness,  and  the  prospect  it 
presents  ought  to  kindle  in  great  and  benevolent  minds  a 
noble  ambition  to  promote  its  spread  and  establishment.  We 
x  have  no  desire  to  insist  upon  a  servile  adherence  to  the  system 
^  .  of  the  Prudential  of  England,  which  has  achieved  so  much  suc- 
cess in  this  field  of  insurance,  but  its  plans  are  certainly  deserv- 
ing of  careful  study,  and  its  prosperous  example  is  full  of 
inspiriting  encouragement.  It  insures  the  life  of  even  the 
day  laborer,  and  collects  of  him  a  weekly  premium  of  a  penny. 
*  *  *  *  it  is  found  that  industrial  insurance  is  in  every 
way,  directly  and  indirectly,  a  benefit  to  the  poorer  classes.  It 
helps  to  train  them  to  habits  of  saving  and  foresight,  and  illus- 
trates, in  the  most  practical  manner,  the  advantages  of  making  a 
provision  for  the  future. ' ' 

These  few  extracts  from  a  most  excellent  article  will  suffice 
to  indicate  the  increasing  knowledge  and  comprehension  of  the 
principles  of  Industrial  insurance,  and  it  would  seem  that  by 
October,  1875,  the  commencement  of  actual  business  operations 
could  no  longer  be  postponed.  But  the  year  1875,  about  the 
middle  of  the  financial  depression,  extending  from  1873  to  1878, 
was  not  one  in  which  it  was  an  easy  matter  to  organize  a  financial 
enterprise  on  a  solvent  and  substantial  basis ;  and  while  the  outlook 
for  a  successful  undertaking  in  the  domain  of  life  insurance 
was  very  promising,  it  was  nevertheless  a  most  serious  matter 
to  overcome  local  difficulties  and  to  secure  the  necessary  finan- 
cial support,  and  I  may  recall  the  remarks  in  the  Insurance  Times 
(October,  1875),  to  the  effect  that  for  such  an  undertaking  it  re- 
quired a  man  and  a  mind  that  ' '  should  stand  so  high  as  to  com- 
mand the  entire  confidence  of  the  people,  and  be  able  to  gather 
around  him  a  corps  of  coadjutors  and  subordinates  who  would  work 
with  him  with  intelligence,  zeal  and  industry,  incapable  of  despair, 
flagging  or  failure. "  It  is  something  very  considerably  to  the 
credit  of  Mr.  Dryden  that  at  this  trying  time  he  was  able  to  meet 
this  requirement  in  the  selection  of  a  Board  of  Directors  and  a 
"corps  of  coadjutors  and  subordinates,"  many  of  whom  are  still 
connected  as  executive  officers  with  The  Prudential  Insurance 


THE   PRUDENTIAL   FRIENDLY  SOCIETY,    1875.  69 

Company  at  the  present  time.  It  is  impossible  in  a  work  of  this 
kind  to  do  justice  to  the  great  services  which  were  rendered  Mr. 
Dryden  by  his  early  associates  at  this  critical  period  of  Prudential 
history,  but  brief  mention  must  be  made  of  the  invaluable  assist- 
ance rendered  the  cause  of  Industrial  insurance  by  Dr.  Leslie  D. 
Ward  and  Mr.  Noah  F.  Blanchard.  It  was  largely  in  consequence 
of  Dr.  Ward's  untiring  efforts  that  a  strong  Board  of  Directors 
was  secured  for  the  Society  and  that  the  necessary  financial  support 
was  obtained  from  men  whose  commercial  standing  in  the  com- 
munity was  second  to  none.  Dr.  Ward  was  at  the  time  a  prac- 
ticing physician  with  a  large  private  practice,  in  which  he  had 
obtained  an  insight  into  the  life  of  the  people  and  had  become 
familiar  with  their  most  urgent  wants.  In  a  similar  manner  Mr. 
Blanchard,  as  a  large  manufacturer  and  employer  of  labor,  had 
learned  by  personal  experience  of  the  existing  need  of  some 
institution  likely  to  accomplish  the  purpose  for  which  The  Pru- 
dential had  been  designed.  Mr.  Blanchard  became  actively  inter- 
ested in  the  affairs  of  the  Society  and  incorporated  into  its  business 
operations  the  same  principles  which  had  been  the  cause  of  his 
earlier  successes  in  other  commercial  enterprises,  and  in  the  logic 
of  events  he  succeeded  to  the  Presidency  in  1879,  which  position 
he  held  until  his  death  in  1881.  Dr.  Leslie  D.  Ward  was  elected 
Vice-President  in  1 884,  which  position  he  holds  at  the  present  time. 
All  discouragements  and  difficulties  notwithstanding,  The 
Prudential  Friendly  Society  by  November  6,  1875,  was  at  last  in 
a  position  to  commence  business,  and  it  is  but  proper  that  I  should 
here  give  in  full  the  directorate  of  the  Society,  as  I  find  it  stated 
in  the  Newark  Daily  Advertiser  of  November  i8th  : — 

NEWARK  DAILY  ADVERTISER. 


THURSDAY  EVENING,  NOVEMBER  18,  1875. 

The  Prudential  Friendly  Society,  812  Broad  Street,  Newark. 
(State  Bank  Building.) 

DIRECTORS. 

Horace  Ailing,  James  M.  Durand,  George  Richards, 

Benjamin  Atha,  Isaac  Gas  ton,  William  Robotham, 

Allen  L.  Bassett,  Albert  O.  Headley,  Chas.  W.  A.  Roemer, 

Noah  F.  Blanchard,         Andrew  Hopper,  Edgar  B.  Ward, 

Chas.  G.  Campbell,          Henry  J.  Yates,  Leslie  D.  Ward, 

Aaron  Carter,  Jr.,  Alfred  Lister,  Marcus  L.  Ward,  Jr., 

William  R.  Drake,  George  D.  G.  Moore,          William  Whitty, 

John  F.  Dryden,  Wm.  H.  Murphy,  EHas  A.  Wilkinson. 

.  BASSETT,  ,  President. 

JOHN  F.  DRYDEN,  Secretary. 


7O  HISTORY   OF   THE   PRUDENTIAL. 

It  will  be  observed  that  Mr.  Dryden  had  been  made  the  Secre- 
tary of  the  Society,  while  Mr.  Bassett  had  been  elected  President. 
Although  Mr.  Bassett  had  been  somewhat  interested  in  insurance 
problems  and  had  been  connected  with  the  earlier  effort  of  the 
Widows'  and  Orphans'  Friendly  Society,  he  had  not  in  any  man- 
ner contributed  directly  to  the  organization  of  the  new  Society  ; 
all  of  the  original  work,  especially  the  correspondence  with  Mr. 
Clark,  had  been  carried  on  by  Mr.  Dryden,  who,  as  a  matter  of 
course,  had  to  associate  with  himself  men  of  capital  and  ability 
to  carry  on  so  difficult  an  enterprise  as  a  new  insurance  organiza- 
tion on  a  substantial  basis  in  the  middle  of  the  financial  depression 
of  1 873-' 78.  During  the  few  years  of  his  administration  Mr. 
Bassett  failed  to  give  satisfaction  to  the  Directors,  and  in  May, 
1879,  resigned.  He  was  succeeded  by  Mr.  Noah  F.  Blanchard,  a 
man  of  exceptional  administrative  ability,  at  whose  death,  in  May, 
1 88 1,  Mr.  John  F.  Dryden  was  unanimously  elected  President, 
which  position  he  still  occupies. 

For  the  purpose  of  acquainting  the  public  with  the  special 
features  of  the  new  plan  of  insurance,  a  prospectus  of  the  Society 
had  been  issued,  which  contained  many  features  which  were  novel 
and  attractive,  while,  at  the  same  time,  the  plan  was  set  forth  in  a 
plain  and  straightforward  manner,  so  much  so  that  the  enterprise 
at  once  attracted  considerable  public  attention,  giving  rise  to  many 
editorial  discussions  in  the  public  prints.  The  following  are  the 
most  important  features  referred  to  at  length  in  the  prospectus  :— 

The  Prudential  Friendly  Society  offered  insurance  against 
sickness  and  death,  as  well  as  a  provision  for  support  in  old  age 
for  persons  of  either  sex  from  infancy  to  old  age. 

The  Society  required  no  medical  examination  and  promised 
to  pay  all  claims  immediately  after  the  filing  of  proper  proofs  of 
death  or  sickness. 

Contributions  were  principally  to  be  made  on  the  weekly- 
payment  plan,  but  many  of  the  benefits  of  the  Society  could  also 
be  obtained  upon  the  monthly,  quarterly,  or  semi-annual  payment 
plan,  according  to  the  tables  of  the  Society. 

As  a  check  upon  imposition  and  fraud  it  was  set  forth  in  the 
prospectus  that  * '  A  member  will  not  be  entitled  to  recover  from 
the  Society  on  account  of  sickness  or  death  happening  before 
three  months'  membership,  or  in  case  of  sickness,  except  from  the 
day  on  which  the  Society  is  notified. ' ' 


THE   PRUDENTIAL   FRIENDLY  SOCIETY,    1875.  71 

The  amounts  for  which  insurance  could  be  made  were 
limited  to  $25  a  week  in  case  of  sickness,  and  to  $500  in  case  of 
death. 

The  following  is  an  abbreviation  of  the  first  adult  rate  table 
used  by  the  Society  : — 

FIRST  ADULT  RATE  TABLE   USED   BY   THE  PRUDENTIAL 
FRIENDLY  SOCIETY. 

AMOUNTS  PAYABLE  AT  DEATH  FOR  A  WEEKLY  PREMIUM  OF 


AGE  NEXT 
BIRTHDAY. 

5 
CENTS. 

10 
CENTS. 

15 
CENTS. 

20 

CENTS. 

25 

CENTS. 

II  to  15 

$IOO  OO 

16  to  20 

125  oo 

$250  oo 

25 

no  oo 

220  oo 

$330  oo 

$440  oo 

3° 

94  oo 

188  oo 

283  oo 

378  oo 

$472  oo 

35 

80  oo 

1  60  oo 

240  oo 

320  oo 

400  oo 

40 

66  oo 

132  oo 

200  00 

267  oo 

334  oo 

45 

54  oo 

108  oo 

164  oo 

219  oo 

274  oo 

50 

88  oo 

133  oo 

177  oo 

221  00 

55 

.  .  .  . 

70  oo 

105  oo 

140  oo 

175  oo 

60 

.  .  .  . 

54  oo 

81  oo 

109  oo 

136  oo 

65 

.... 

62  oo 

82  oo 

104  oo 

7O 

62  oo 

78  oo 

/** 

7cr 

^7  OO 

JO 

O/  " 

No  benefit  will  be  payable  until  certificate  has  been  in  force  three 
months.    Contributions  payable  during  life.    Benefits  payable  only  at  death. 


To  the  preceding  table  must  be  added  the  following  extract 
from  the  prospectus  explaining  the  methods  of  payment  and 
objects  to  be  realized  : — 

'  *  The  Society  will  use  the  utmost  promptness  consistent 
with  safety  in  the  payment  of  claims.  In  the  event  of  sickness, 
benefits  will  be  paid  from  week  to  week  while  sickness  lasts. 
In  event  of  old  age,  benefits  will  be  paid  on  a  fixed  day  of 
each  month.  In  event  of  death,  benefits  will  be  paid  immediately 
after  proper  proofs  are  filed  with  the  Society,  in  order  that  the 
money  may  be  available  at  once  for  funeral  expenses. ' ' 

As  has  been  stated,  the  Society  from  the  start  made  the  bene- 
fits of  life  insurance  accessible  to  persons  of  all  ages>  a  special 
infantile  table  having  been  constructed,  of  which  the  following  is 
an  abbreviated  copy,  and  to  which  I  have  added  such  extracts  as 


72  HISTORY   OF  THE   PRUDENTIAL. 

are  contained  in  the  original  prospectus.  It  will  be  observed  that 
the  lowest  premium  accepted  was  three  cents,  and  the  table  there- 
fore is  based  on  this  minimum  premium  :— 

FOR  THREE  CENTS  A  WEEK,  TWELVE  CENTS  A  MONTH,  THIRTY-FIVE 
CENTS  A  QUARTER,  SIXTY-FIVE  CENTS  SEMI-ANNUALLY,  OR  ONE 
DOLLAR  AND  TWENTY-FIVE  CENTS  ANNUALLY,  THE  PRUDENTIAL 
AT  THE  DEATH  OF  A  CHILD  AS  FOLLOWS  : — 


AGE  OF  CHILD 

AMOUNTS  PAYABLE  AFTER 

MEMBERSHIP.* 

THREE  MONTHS. 

ONE  YEAR. 

I 

$10  00 

$12  50 

2 

10   00 

12    50 

3 

10  00 

15  oo 

4 

12   50 

17    50 

i 

15  oo 

17  50 

20   00 

25  oo 

7 

20  oo 

30  oo 

8 

25  oo 

40  oo 

9 

30  oo 

50  oo 

If  the  child  should  die  within  three  months  from  date  of  admission 
to  membership,  no  Benefit  will  be  payable. 

This  table  was  so  arranged  that  the  insurance  increased  from 
year  to  year  with  increasing  age,  while  the  premium  remained 
the  same,  this  being  necessary  in  view  of  the  well-known  fact 
that  the  rate  of  mortality  is  highest  at  birth,  gradually  declines 
until  about  ages  twelve  to  thirteen,  and  after  that  constantly 
increases  to  the  highest  attainable  age.  Thus  it  will  be  observed 
that  the  principles  of  actuarial  science  were  made  applicable  to 
the  most  complicated  part  of  the  business. 

The  aims  and  objects  of  the  Society  are  fully  set  forth  in 
that  part  of  the  prospectus  which  dealt  with  the  ' '  Plan  of  the 
Prudential, ' '  where  it  is  stated  that  ' '  It  is  the  special  aim  of  this 


*  It  was  at  first  the  practice  to  consider  the  age  last  birthday  as  the  age 
at  entry,  hence  age  one  is  included  in  this  table.  Under  the  present  prac- 
tice of  considering  the  age  next  birthday  age  two  is  the  first  to  find  a  place 
in  the  infantile  table.  It  has  never  been  the  policy  of  the  company  to 
accept  risks  at  ages  below  one  for  reasons  which  have  been  discussed  in 
other  parts  of  this  work. 


THE;  PRUDENTIAL  FRIENDLY  SOCIETY,  1875.          73 

Society  to  enable  people  of  small  means  to  provide  themselves 
with  relief  in  sickness  or  accident ;  second,  for  a  pension  in  old 
age  ;  third,  for  an  adult  burial  fund  ;  fourth,  for  an  infant  burial 
fund.  The  contributions  charged  for  the  above-named  bene- 
fits have  been  computed  by  eminent  actuaries  of  America  and 
England,  and  are  such  as  careful  study  and  close  calculation  have 
shown  to  be  equitable  and  necessary.  They  are  as  low  as  the 
Society  can  afford,  for  the  benefits  granted,  and  are  high  enough 
to  make  it  safe. ' ' 

Of  the  above-named  four  distinct  branches,  the  first,  as  has 
been  stated,  was  discontinued  after  a  few  years  of  actual  expe- 
rience, as  had  been  the  case  with  the  English  companies  attempt- 
ing to  transact  a  sickness  insurance  scheme  on  a  large  scale. 
The  second  failed  to  meet  with  public  favor  on  account  of  the 
inherent  difficulty  of  obtaining  so  desirable  an  object  as  independ- 
ence in  old  age  by  the  payment  of  the  small  sums  which  the 
working  people  of  the  period  could  afford  to  devote  to  the 
accumulation  of  a  fund  sufficient  to  yield  a  substantial  annuity  in 
old  age.  The  third  and  fourth  branches  became  in  time  the  all- 
important  parts  of  the  business,  experience  having  demonstrated 
that  the  demand  for  a  sum  payable  at  death  was  greater  than  the 
demand  for  other  insurance  features,  however  desirable  in  them- 
selves. 

The  Prudential  Friendly  Society  was  thus  plainly  what  it  \  y 
was  designed  to  be,  an  Industrial  insurance  company  on  the  plan  \ 
of  the  British  Prudential,  with  such  modifications  and  slight 
changes  as  seemed  desirable  at  the  time  to  make  the  plan  attract- 
ive to  the  American  working  people.  In  the  prospectus  it  had 
been  clearly  stated  that  * '  The  Prudential  is  designed  for  persons 
of  limited  means, ' '  and  that  *  'Its  benefits  may  be  secured  by  cutting 
off  some  luxury  which  can  be  dispensed  with  without  injury  to 
health  or  happiness. ' '  It  was  never  the  plea  of  Industrial  insur- 
ance companies  that  they  were  soliciting  the  risks  of  paupers 
or  the  lowest  poor,  but  from  the  start  they  made  an  effort  to 
reach  the  industrial  masses — if  it  be  so,  the  industrious  poor  ; 
but  in  their  efforts  to  obtain  business,  in  their  efforts  to  insure 
as  large  a  proportion  of  the  population  as  possible,  they  never 
failed  to  keep  in  mind  the  early  principle  of  the  Prudential, 
that  ' '  The  benefits  of  Industrial  insurance  may  be  secured  by 
cutting  off  some  luxury  which  can  be  dispensed  with  without 


74  HISTORY   OF  THE   PRUDENTIAL. 

injury  to  health  or  happiness,"  and,  I  may  add,  without  detri- 
ment to  habits  of  thrift  in  other  directions  than  insurance.  For 
even  at  this  time,  before  a  single  application  had  been  accepted, 
it  had  been  recognized  by  Mr.  Dryden,  and  was  so  stated  in 
the  first  prospectus,  that  "  A  membership  in  the  Prudential  will 
induce  prudence  and  economy,  and  become  the  foundation  of 
good  habits,"  as  "It  may  be  the  means  of  saving  an  individual 
or  family  from  a  fate  worse  than  death."  In  these  after-years, 
when  so  much  has  been  said  and  written  on  the  question  of  the 
possible  evil  effect  of  this  system  of  insurance  on  the  morals  and 
manners  and  material  welfare  of  the  people,  it  is  well  to  recall 
these  simple  straightforward  statements,  which  were  thus  incor- 
porated into  the  foundations  of  Industrial  insurance  in  America, 
and  which  are  to-day  its  strongest  claim  to  public  favor,  as  they 
have  for  twenty-five  years  been  the  strongest  inducement  to  the 
industrial  masses  to  keep  the  millions  of  policies  in  force  on  the 
books  of  the  Industrial  companies. 

Having  pointed  out  the  grounds  on  which  the  Prudential 
Friendly  Society  from  the  very  beginning  rested  its  case,  it  may 
not  be  out  of  place  to  refer  at  some  length  to  the  public  approval 
of  the  introduction  of  Industrial  insurance  in  the  city  of  Newark 
in  1875.  Among  others  the  Newark  Daily  Advertiser,  one  of 
the  oldest  newspapers  in  the  northern  part  of  the  State,  referred 
to  the  new  plan  of  the  Prudential  as  follows  :— 

A  new  feature  in  insurance  has  just  been  introduced  in  this  city, 
known  as  the  Prudential  Friendly  Society,  directed  and  officered  by  gentle- 
men of  the  highest  character.  Its  business  location  is  in  the  State 
Bank  building,  and  as  it  is  the  first  move  in  this  direction  made  in  this 
country,  its  working  should  be  explained. 

The  plan  is  that  a  certain  weekly  or  monthly  stipend  paid  to  the 
Company  shall  secure  a  certain  return  in  case  of  sickness,  a  provision  for 
funeral  expenses  in  case  of  death  and  in  other  cases  a  pension  after  a  cer- 
tain age.  This  latter  phase  is  not  new,  except  as  it  is  attainable  by  persons 
of  small  means  who  are  "  Prudential "  enough  to  make  and  invest  small 
savings  at  frequent  intervals.  The  Prudential  Friendly  Society  of  Newark 
provides  the  applicant  for  membership  with  a  blank  on  which  are  printed 
certain  questions,  which  are  answered  and  signed  by  the  applicant  and 
then  referred  to  the  Board  of  Directors.  No  medical  examination  is 
required,  and  the  application  is  approved  or  rejected  as  the  Board  may 
decide.  If  accepted,  something  like  a  pass-book  is  issued  to  the  new 
member,  in  which  is  printed  the  agreement  between  him  and  the  Society, 
and  in  which  the  account  between  the  two  is  written  up  at  every  payment. 


THE   PRUDENTIAL   FRIENDLY  SOCIETY,    1875.  75 

In  so  far  it  does  not  differ  much  from  many  other  forms  of  benefit  or  burial 
societies  employed  by  the  working  classes  of  England. 

But  the  Prudential  Friendly  Societies  go  further  and  more  wisely. 
They  place  no  restriction  on  account  of  age,  sex  or  occupation.  All  share 
alike  from  one  year  of  age  to  the  oldest  limit  of  our  race,  except  as  to  the 
rate  charges,  which  vary  with  the  age.  By  tables  prepared  from  a  very 
wide  experience  in  England,  and  investigations  scientifically  conducted, 
the  societies  have  ascertained  the  actual  experience  of  two  millions  of  lives* 
in  England,  Wales  and  Scotland,  as  regards  sickness,  old  age  and  death. 
These  investigations  show  the  experience  on  males  and  females  separately, 
the  effect  of  life  in  cities,  towns  and  rural  neighborhoods  and  of  different 
trades  and  occupations,  from  the  worker  in  the  mine  to  the  mechanic  in 
the  shop,  the  seamstress  at  her  work,  the  clerk  in  the  store  and  all  the 
various  avocations  and  professions.  They  also  show  the  average  amount  of 
sickness  of  each  particular  year  of  life  from  infancy  to  old  age.  It  is  a  fact 
brought  out  by  these  researches  that  the  risk  increases  with  the  age  of  the 
member,  that  youth  resists  the  assaults  of  disease  and  more  easily  throws 
it  off,  while  older  age  succumbs  more  readily  to  either  sickness  or  death. 
The  practice  of  many  benevolent  societies  has  been  directly  the  opposite 
of  this,  and  so  either  the  young  person  pays  too  much  or  the  old  too  little. 
In  fact  it  is  the  theory  of  some  of  them  that  the  young  should  shelter  the 
old.  It  may  be  very  generous,  but  it  is  not  business. 

These  data  reached,  and  they  have  been  carefully  reached  by  a  long 
experience,  the  general  average  of  the  chance  of  having  to  pay  for  a  sick- 
ness, an  accident,  a  burial  or  a  pension  can  be  fixed,  although  the  individual 
cases  will  occasionally  confound  the  statistics  and  the  member  takes  out 
vastly  more  than  he  puts  in.  For  the  sick  relief  no  greater  amount  is 
granted  than  $25  per  week,  and  for  the  burial  fund  $500  is  the  limit.  When 
a  loss  accrues  it  is  instantly  payable.  The  terms  of  the  agreement  are  so 
simple  that  questions  of  fraud  are  not  likely  to  arise,  and  the  presentation 
of  the  evidence  is  all  that  is  needed  to  secure  the  payment.  The  whole 
subject  is  worthy  of  study.  We  have  given  only  a  meagre  outline  of  its- 
general  features  and  are  not  altogether  informed  as  to  all  its  merits  or 
demerits.  But  we  know  that  it  has  succeeded  in  England,  and  our  rank  as 
a  manufacturing  town,  the  close  likeness  of  our  industrial  classes  to  those 
of  the  best  class  of  English  mechanics,  induces  us  to  suppose  that  the  plan 
may  work  a  great  beneficence. 

In  a  similar  manner  the  Society  received  the  endorsement 
of  other  leading  newspapers  of  Newark,  and,  as  an  indication  of 
the  careful  consideration  given  to  the  subject,  I  quote  the  following 
extract  from  the  Newark  Evening  Courier of  November  13, 1875  : — 

We  have  examined  with  considerable  interest  and  satisfaction  the 
prospectus  of  a  new  institution  in  our  city  called  The  Prudential  Friendly 
Society,  and  which  is  located  in  the  State  Bank  building,  812  Broad  street. 
This  Society  has  for  its  object  to  provide  aid  to  its  members  whether  male 


76  HISTORY   OF  THE   PRUDENTIAL. 

or  female  in  event  of  sickness,  old  age  and  death.  *  *  *  *  The  contract 
between  the  Society  and  the  member  is  very  plain,  and  there  seems  very  little 
chance  for  misunderstanding.  It  is  "  so  much  benefit  for  so  much  money." 
One  of  the  foundation-stones  of  the  system  which  the  Prudential  has  intro- 
duced here  is  equity.  Members  are  charged  a  contribution  according  to  age, 
and  the  rates  are  so  adjusted  that  each  age  contributes  to  the  funds  of  the 
Society  just  in  proportion  as  that  age  contributes  to  the  risk.  Experience 
has  shown  that  at  age  twenty  a  person  may  be  expected  to  be  sick  a  little 
over  eight-tenths  of  one  week,  while  at  sixty  a  person  will  upon  the 
average  be  sick  a  little  over  four  weeks  in  a  year.  Now  it  would  be  mani- 
festly unjust  to  charge  two  persons  of  the  two  different  ages  named,  the 
same  amount  of  contribution  for  an  equal  benefit,  when  one  contributes 
five  times  as  much  to  the  risk  of  the  Society  as  the  other.  The  Prudential 
has  kept  this  fact  in  view  in  making  up  rates,  and  has  adopted  the  plan  of 
charging  contributions  according  to  the  age  at  the  time  a  member  enters 
the  Society.  In  fact  the  whole  plan  of  the  Society  rests  upon  a  scientific 
basis,  a  basis  which  has  been  ascertained  and  approved  by  the  highest 
actuarial  ability  in  this  country  and  England. 

In  a  city  like  Newark,  whose  population  is  largely  made  up  of  working 
men  and  women,  the  Prudential  ought  to  find  a  large  and  successful  field 
of  operation.  //  seems  to  us  that  this  organization  is  calculated  to  accom- 
plish a  work  of  great  beneficence  wherever  are  to  be  found  poor  families  in 
which  the  expense  of  sickness  or  death,  or  the  infirmities  of  old  age  would 
cause  discomfort  or  distress.  It  certainly  will  be  a  great  boon  if  people  of 
limited  income  can,  by  payments  so  small  as  not  to  cause  inconvenience, 
provide  a  fund  sufficient  to  pay  the  expense  of  a  decent  funeral,  or  which 
shall  relieve  the  suffering  and  sorrow  of  the  sick  chamber. 


And  as  a  further  indication  of  the  approval  on  the  part  of 
the  press,  I  quote  an  extract  from  the  Newark  Register  of 
November  13,  1875,  in  which  the  subject  of  Industrial  insurance 
is  also  discussed  at  length  from  the  standpoint  of  public  policy  :— 

It  is  often  said  that  there  is  nothing  new  under  the  sun  ;  but  the  plan 
of  insurance  put  forth  by  the  Prudential  Friendly  Society,  an  institution 
just  organized  in  this  city  under  the  auspices  of  some  of  our  very  best  and 
most  responsible  citizens,  is  certainly  a  novelty  in  this  country. 

A  feature  of  the  Prudential  system  is  the  certificate  issued  guarantee- 
ing payment  of  a  burial  fund  only,  and  may  be  obtained  at  all  ages — from 
the  child  one  year  old  to  the  old  man  or  woman  who  has  reached  the  ripe 
old  age  of  seventy-five. 

Every  pains  seems  to  have  been  taken  by  the  projectors  of  this  institu- 
tion to  adapt  it  to  the  requirements  of  people  in  moderate  circumstances. 
Hence,  in  event  of  sickness  or  accident,  the  society  pays  losses  promptly 
from  week  to  week  while  sickness  lasts,  that  the  money  may  be  had  and 
used  when  it  will  be  of  the  greatest  value  ;  and  in  old  age  the  pension  will 


THE  PRUDENTIAL  FRIENDLY  SOCIETY,    1875.  77 

be  paid  upon  a  fixed  day  of  each  month  with  as  much  regularity  and  cer- 
tainty as  a  pension  by  the  Government. 

When  death  occurs  the  burial  fund  will  be  paid  immediately  after  the 
proper  evidence  of  the  loss  is  filed  in  the  office  of  the  society,  and  thus  it 
becomes  available  for  funeral  expenses,  at  a  time  which  to  most  people  of 
slender  income  is  one  of  the  greatest  extremity. 

The  terms  of  payment  required  are  also  of  the  most  advantageous 
kind.  It  would  be  worse  than  vain  to  offer  poor  people  protection  against 
the  adversities  of  life  and  death,  if  the  terms  were  such  as  to  put  it  practi- 
cally beyond  their  reach.  But  what  prudent,  right-minded  working  man  or 
woman  can  not  and  will  not  lay  by  a  few  cents  each  week  or  month  to 
provide  for  his  or  her  own  future  comfort,  or  the  comfort  of  those  whom  it 
is  a  right  and  duty  to  protect?  It  is  with  great  wisdom,  it  seems  to  us, 
that  the  Prudential  has  with  so  much  care  studied  the  necessities  of  the 
industrial  classes.  It  makes  the  society  in  reality  what  it  is  designed  to  be,, 
an  institution  for  all. 

One  of  the  most  gratifying  facts  connected  with  this  society  is  its 
strength  and  security.  It  is  not  too  much  to  say  that  no  institution  in 
Newark — a  city  justly  proud  of  its  strong  moneyed  corporations — has  a 
Board  of  Directors  that  can  more  strongly  claim  the  confidence  of  our 
people.  The  gentlemen  are  unexceptionable  as  to  ability,  wealth  and 
character.  In  this  there  is  a  guarantee  that  the  affairs  of  the  Prudential 
will  be  honestly  and  ably  managed. 

The  system  upon  which  the  society  transacts  its  business  has  received 
a  long,  patient  and  thorough  investigation.  It  is  about  three  years  since 
an  examination  into  the  experience  of  similar  societies  in  England  was 
first  begun  with  a  view  to  establishing  a  society  here,  and  although  this 
has  been  quietly  carried  on,  the  investigation  has  been  the  most  searching 
and  thorough.  The  statistics  upon  which  the  rates  are  based  are  derived 
from  the  experience  of  a  large  number  of  societies  and  extend  over  many 
years,  and  are  made  by  some  of  the  oldest  actuaries  in  London.  As  a 
matter  of  still  greater  precaution  these  have  been  again  examined  and 
tested  by  the  Actuary  of  the  society,  Professor  John  E.  Clark,  of  the 
Sheffield  Scientific  School  of  Yale  College.  These  rates  are  founded  upon 
the  well-established  fact  that  the  risk  increases  with  the  increase  in  age, 
and  that  it  therefore  costs  less  to  insure  a  young  person  than  it  does  an 
old  one.  Each  particular  age  is  charged  according  to  the  risk  he  or  she 
brings  into  the  society  on  joining  it. 

The  society  may  be  said  to  be  founded  upon  a  rock.  In  a  city  like 
Newark,  embracing  so  many  working  men  and  women,  the  Prudential 
ought  to  do  a  large  business.  In  fact,  we  can  not  see  how  this  class  of 
people  can  afford  to  do  without  its  protection. 

In  these  newspaper  articles  there  is  so  clear  a  recognition  of 
the  value,  importance  and  necessity  of  such  an  institution  as  the 
Prudential,  that  I  can  not  but  think  that,  but  for  a  recognized 
and  actually  existing  necessity,  it  would  have  been  impossible  for 


78  HISTORY  OF  THE   PRUDENTIAL. 

the  Society  to  have  been   ushered   into   existence   by  critics  as 
friendly  as  they  were  honest,  conservative  and  wise. 

While  the  new  undertaking  received  so  warm  a  welcome  in 
the  city  of  its  birth,  but  little  knowledge  of  the  organization  of 
the  Society  seems  to  have  extended  beyond  the  local  boundary , 
and  only  fragmentary  references  occur  in  the  insurance  journals 
during  the  latter  part  of  1875.  The  Insurance  Monitor  in  its 
November  number  referred  to  the  Prudential,  making  at  the 
same  time  reference  to  a  similar  attempt  to  organize  an  Industrial 
insurance  company  in  Washington,  D.  C.  As  has  previously 
been  stated,  The  Industrial  Life  Insurance  Company  of  Wash- 
ington never  entered  the  stage  of  actual  operations,  and  I  confine 
my  quotation  to  the  reference  made  to  the  Prudential  Friendly 
Society  : — 

The  Newark  enterprise  is  known  as  the  Prudential  Friendly  Society, 
modeled  after  the  English  associations  of  the  same  name,  with  an  effort,  so 
far  as  we  have  learned,  to  profit  from  the  experience  of  the  best  among 
them — the  Manchester  Unity  and  the  Foresters.  Here  again  a  word  of 
caution  may  not  be  amiss.  Until  the  subject  was  brought  to  the  attention 
of  Parliament  some  few  years  since,  a  large  proportion  of  these  organizations 
were,  through  ignorance  or  recklessness,  sadly  mismanaged,  and  numbers 
of  them  were  in  a  bankrupt  condition,  while  others  were  rapidly  drifting 
into  the  same  state.  This  condition  of  things  was  brought  about  by  the 
same  error  which  characterizes  the  co-operative  schemes  in  this  country — 
a  total  disregard  of  the  influence  of  age  on  the  cost  of  insurance.  And  we 
would  remind  those  in  charge  of  this  young  enterprise  that  whatever  the 
form  of  organization  or  nature  of  the  benefit,  age,  as  an  element  of  the  risk, 
can  not  be  disregarded  without  almost  certain  failure  in  the  end.  The 
early  experience  of  a  friendly  society  is  peculiarly  deceptive.  Only  the 
probing  of  a  skilled  actuary  can  discern  the  insidious  elements  of  future 
evils  existing  under  the  deceptive  strength  of  a  friendly  society  for  years 
before  the  final  crash. 

The  manufacturing  importance  of  Newark,  approaching  so  nearly  the 
condition  of  English  cities,  gives  a  strong  encouragement  to  those  interested 
in  the  success  of  this  new  enterprise. 

I  have  been  compelled,  for  want  of  space,  to  limit  myself 
to  meagre  abstracts  from  the  public  press  of  the  period,  for  the 
purpose  of  illustrating  the  distinct  local  demand  for  such  an  in- 
stitution as  the  Prudential,  and  the  universal  and  intelligent  local 
recognition  of  the  value  of  Industrial  insurance  from  the  stand- 
point of  public  policy.  Had  space  permitted,  I  could  have  added 


THE   PRUDENTIAL   FRIENDLY   SOCIETY,    1875.  79 

materially  to  this  proof  in  support  of  the  assertion  that  Industrial 
insurance  in  this  country  has  been  founded  in  consequence  of  a 
social  demand,  representing  a  social  growth  which  has  its  founda- 
tion in  the  necessities  of  the  people,  and  that  in  consequence  the 
subsequent  enormous  development  and  extent  of  the  business  is  to 
be  traced  in  the  needs  of  the  people,  which  had  been  ill-supplied 
by  a  multitude  of  insurance  schemes,  all  of  which  have  since  gone 
into  bankruptcy  or  decay. 

So  much  space  having  been  given  to  the  factors  leading  up 
to  the  formation  of  the  Society,  I  must  needs  deal  very  briefly 
with  the  actual  experience  and  business  history.  I  have  already 
stated  that  the  first  actual  business  transaction  occurred  on 
November  loth,  when  a  Mr.  W.  R.  Drake,  Cashier  of  the  German 
Bank  of  Newark,  applied  for  an  insurance  of  $500,  payable  at 
death,  and  $10  per  week,  payable  in  case  of  sickness,  the  weekly- 
premium  payments  to  cease  at  the  age  of  sixty-five.  Mr.  Drake, 
it  will  be  observed  on  reference  to  the  list  of  directors,  was  also  one 
of  the  members  of  that  Board,  and  no  doubt  was  influenced  in 
taking  the  risk  by  this  personal  relation  to  the  Society.  The 
application  was  signed  by  Mr.  Dryden  himself,  as  a  witness  to 
the  transaction  which  marks  the  actual  beginning  of  Industrial 
insurance  in  America.  It  was  only  by  slow  degrees  that  the 
business  became  known  to  the  public,  nevertheless  by  December  i , 
1875,  62  applications  had  been  received.  During  the  month  242 
more  applications  were  received,  and  during  January,  1876,  the 
number  of  new  applications  reached  558.  During  a  little  less 
than  three  months  862  persons  had  made  application  for  Indus- 
trial insurance  on  the  various  plans  offered  to  the  public  by  the 
Society  at  this  early  period  of  its  existence.  During  the  last  week 
of  January,  1876,  206  applications  were  received,  which  must  be 
looked  upon  as  a  very  strong  indication  of  the  local  demand  for  this 
class  of  insurance.  As  to  the  character  of  the  business  received,  it 
is  possible  to  answer  some  -questions  on  this  point  by  the  statis- 
tics of  the  first  one  thousand  applications,  which  have  been  ab- 
stracted from  the  records  of  the  Society.  Of  the  first  1,000  appli- 
cations 25  have  been  lost  or  partly  destroyed,  '29  are  duplicates, 
indicating  double  insurances,  329  are  infantile  risks  or  applica- 
tions for  insurance  on  persons  under  ten  years  of  age,  while  617 
are  adult  applications,  of  which  328  were  on  males  and  289  on 
females.  The  occupations  of  the  328  males  are  given  in  the 


8o 


HISTORY   OF  THE   PRUDENTIAL. 


following  table,  with  as  much  detail  as  the  space  at  my  command 
permits  :  — 


OCCUPATIONS  OF  MALES  INSURED  IN 
THE  PRUDENTIAL  FRIENDLY  SOCIETY. 


Accountant, 2 

Agent, 3 

Bag-Factory  Employee,  ....  2 

Baker, 6 

Bank  Employee, 4 

Barber, 9 

Bartender, I 

Blacksmith, 6 

Bookkeeper 5 

Brass  Moulder, 3 

Butcher, 6 

Car  Driver, 3 

Carpenter, n 

Clerk,     29 

Coachman, 6 

Conductor,  Horse-car, 3 

Driver,  Teamster, 8 

Druggist, 2 

Editor, 2 

Engineer, 3 

Florist, 3 

Gardener,      2 

Grocer,      4 

Gunsmith, i 

Hatter 4 


Hostler, 4 

•Insurance, 2 

Janitor,      2 

Japanner, 4 

Jeweler,     .    .        5 

Justice  of  the  Peace, i 

Laborer, 5 

Lawyer, 3 

Liquor  Dealer i 

Machinist, n 

Manufacturer, 5 

Merchant, 3 

Moulder, 3 

Musician, 3 

Painter, 3 

Physician i 

Plumber, 2 

Salesman, 5 

Shoemaker, 5 

Student, 30 

Surrogate, i 

Undertaker, 3 

Waiter,      4 

Miscellaneous  Occupations,   .    .  94 


This  table  would  seem  to  prove  that  the  applicants  for  this 
class  of  insurance  represented  all  the  elements  of  the  population, 
including  men  employed  in  well-paid  occupations,  as  well  as  those 
who  earned  their  living  by  day  labor.  The  truly  industrial 
character  of  this  class  of  risks  is  clearly  indicated  by  the  data 
represented  in  the  preceding  tabulation. 


THE   PRUDENTIAL  FRIENDLY  SOCIETY,    1875. 


8l 


The  age  distribution  of  the  329  infantile  applications  is  given 
in  the  following  table,  as  an  indication  of  the  demand  for  this 
form  of  insurance  at  early  ages  : — 

PRUDENTIAL  FRIENDLY  SOCIETY.     i875-'76. 
INFANTILE  APPLICATIONS. 


AGES  AT  ENTRY. 


AGE  L,AST 
BIRTHDAY. 

MALE. 

FEMALE. 

TOTAL. 

I 

3 

5 

8 

2 

24 

21 

45 

3 

29 

23 

52 

4 

15 

22 

37 

21 

18 

39 

6 

17 

14 

3i 

I 

18 
14 

19 

18 

37 
32 

9 

13 

10 

23 

10 

12 

13 

25 

166 

163 

329 

This  table  would  seem  to  prove  that  there  was  no  selection 
against  the  Company  in  an  excessive  aggregation  of  risks  at  very 
young  ages,  but  that  the  distribution  of  applicants  by  age  periods 
was  normal  and  fully  in  accordance  with  the  general  distribution 
of  the  population  at  the  ages  indicated.  The  reason  for  the 
non-acceptance  of  risks  under  one  year  is  to  be  found  in  the  fact 
that  on  account  of  the  excessive  mortality  prevailing  at  ages 
under  one  the  amounts  which  could  be  insured  for  under  such 
policies  would  not  be  sufficient  to  attract  custom  enough  to 
warrant  the  acceptance  of  this  class  of  risks. 

In  England  it  has  always  been  the  custom  to  insure  children 
from  birth,  or  from  within  a  few  weeks  of  the  date  of  their  birth, 
for  small  sums  in  return  for  a  weekly  premium  of  one  penny.  It 
is  self-evident  that  the  large  increase  in  the  business  operations  of 
Industrial  companies  must  gradually  diminish  the  number  of 
uninsured  persons,  making  it  desirable  to  accept  risks  from  birth 
upwards,  but  this  point  is  not  likely  to  be  reached  in  this  country 
for  a  number  of  years  to  come. 


HISTORY   OF  THE   PRUDENTIAL. 


The  following  table  will  show  the  age  distribution  of  the 
617  adult  applicants,  with  distinction  of  sex  :— 

PRUDENTIAL  FRIENDLY  SOCIETY.     1875-' 76. 
ADULT  APPLICATIONS. 


AGB  AT  ENTRY. 

MALE. 

FEMALE. 

TOTAL. 

10-14 
15-19 

38 
43 

32 
39 

S 

20-24 

52 

47 

99 

25-29 

50 

46 

96 

3°-34 

47 

26 

73 

35-39 

19 

22 

4i 

40-44 

25 

21 

46 

45-49 

24 

19 

43 

50-54 

14 

14 

28 

55-59 

8 

IO 

18 

60-64 

2 

8 

10 

65-69 

3 

4 

7 

70-74 

i 

i 

2 

Unstated, 

2 

2 

Totals, 

328 

289 

6l7 

On  examination  of  this  table  it  will  be  found  that  the  age 
distribution  was  normal,  showing  no  indication  of  adverse  selec- 
tion of  applicants  at  advanced  ages,  but  rather  an  aggregation  at 
the  productive  period  of  life,  when  men  and  women  are  actively 
engaged  in  industrial  occupations.  The  tables  given  confirm  the 
preceding  conclusion,  that  the  demand  for  Industrial  insurance 
came  directly  from  the  industrial  population,  and  that  this  class 
of  risks  was  fully  represented  in  the  body  of  the  policy-holders  of 
the  Society  from  the  beginning. 

Among  other  facts  brought  out  by  an  examination  of  the 
early  records  of  the  Society,  it  appears  that  the  method  of  pay- 
ment selected  by  the  majority  of  the  applicants  was  for  insur- 
ance on  the  weekly-  or  bi-weekly-payment  plan.  Out  of  the 
1,000  applicants  the  information  as  to  method  of  payment  is  avail- 
able in  946  cases,  and  of  this  number  484  selected  the  weekly- 
payment  plan,  130  the  bi-weekly-payment  plan,  180  the  monthly- 
payment  plan,  29  elected  to  pay  quarterly,  75  semi-annually,  and 
j  6  preferred  to  pay  their  premiums  once  a  year.  For  34  cases  the 


THE  PRUDENTIAL   FRIENDLY  SOCIETY,    1875.  83 

information  as  to  method  of  payment  was  not  stated.  Hence,  it  is 
clear  that  in  the  majority  of  cases  the  weekly-premium  plan  was 
given  preference,  for,  even  in  cases  where  the  premium  pay- 
ments were  made  bi-weekly  or  monthly,  it  is  to  be  assumed  that 
this  was  the  choice  of  the  office,  to  avoid  loss  of  time  in  making 
collections.  The  industrial  character  of  the  risks  accepted  is, 
therefore,  further  supported  by  the  distinct  preference  given  to 
premium  payments  on  the  weekly  plan. 

Some  further  information  of  interest  is  supplied  by  the  data 
pertaining  to  the  amount  of  insurance  applied  for.  While  all  of 
the  infantile  risks  accepted  were  for  burial  purposes  only,  of  the 
617  adult  applicants  for  which  the  information  is  available,  356 
applied  for  insurance  payable  at  death,  136  for  burial  insurance 
and  additional  benefits  in  case  of  sickness,  96  for  sickness  benefits 
only,  24  for  sickness,  annuity  and  death  benefits,  while  for  5  the 
information  is  not  available.  It  is,  therefore,  shown  that  distinct 
preference  was  given  to  insurance  payable  at  death,  and,  while 
some  preference  was  given  to  sickness  insurance  in  combination 
with  burial  insurance,  only  a  very  small  demand  seems  to  have 
existed  for  sickness  insurance  alone,  and  the  industrial  character 
of  the  class  of  risks  accepted  by  the  Society  is,  therefore,  further 
supported  by  the  data  showing  the  preference  given  by  applicants 
to  insurance  for  burial  purposes  only. 

An  examination  of  the  data  pertaining  to  the  amounts  of 
insurance  applied  for  indicates  a  tendency  to  insure  for  sums  of 
from  $100  to  $150.  Out  of  521  applicants,  90  insured  for  sums 
under  $100,  324  insured  for  sums  between  $100  and  $200,  66 
insured  for  sums  from  $200  to  $300,  2 1  for  sums  from  $300  to 
$400,  while  only  15  insured  for  sums  of  $500,  which  at  that  time 
was  the  maximum  amount  which  could  be  insured  for  in  the 
Society.  For  five  applicants  the  information  was  not  stated. 
The  foregoing  data  and  statistics  are  clearly  in  favor  of  the  con- 
clusion that  the  applicants  for  Industrial  insurance  represented 
the  industrial  population,  or  men  and  women  employed  in  gainful 
occupations  ;  in  other  words,  the  superior  class  of  working  people 
of  the  city  of  Newark  at  that  period. 


84  HISTORY  OF  THE   PRUDENTIAL. 


CHAPTER  VI. 

THE  PRUDENTIAL   FRIENDLY  SOCIETY,    1876-1877. 

By  the  first  of  February,  1876,  it  could,  therefore,  with  some 
truth  be  said  that  the  experimental  stage  of  the  business  had 
been  passed,  and  that  no  further  proof  was  needed  to  demonstrate 
the  public  demand  for  Industrial  insurance  in  one  of  the  most 
important  manufacturing  cities  in  the  United  States.  1  It  could 
even  be  said  with  some  truth  of  Newark  as  an  able  writer  had 
said  of  Industrial  insurance  in  England,  that  "A  vast  yet 
silent  and  unseen  revolution  is  in  operation  among  the  work- 
ing classes.  Life  insurance  until  lately  has  been  exclusively 
confined  to  the  upper  and  middle  classes  of  Englishmen.  By 
means,  however,  of  what  is  called  the  Industrial  system  of  life 
insurance,  adopted  by  certain  offices,  life  insurance  for  small 
amounts  is  becoming  so  popular  among  workingmen  that  signs 
are  not  wanting  that  the  life-insurance  movement  will  permeate 
upwards  and  receive  an  impetus  among  the  higher  classes  from  its 
adoption  by  those  at  the  other  end  of  the  scale.  This  great  and 
beneficial  work  is  mainly  carried  on  by  agents  in  London  and  the 
manufacturing  districts,  who  go  about  among  the  workingmen  and 
persuade  them  to  effect  insurance,  and  then  call  upon  them  every 
week  for  the  premiums. ' '  * 

While  a  large  portion  of  the  business  obtained  by  the  first  of 
February  had,  of  course,  been  secured  as  the  result  of  direct  per- 
sonal solicitation  by  the  agents  of  the  Society,  proof  is  not  wanting 
that  the  working  people,  on  their  own  account,  had  applied  at  the 
office  of  the  Society  for  information  as  to  the  new  plan  of  insur- 
ance, to  which  reference  had  been  made  in  the  daily  newspapers 
of  the  period.  In  fact,  during  December,  1875,  it  had  already 
become  necessary  to  keep  the  office  of  the  Society  open  evenings, 


*  The  Life  Assurance   Handbook,  by  George  Clifford,  p.  53  et  seq. 
London,  1876. 


THE  PRUDENTIAL   FRIENDLY  SOCIETY,    1876-1877.        85 

to  furnish  information  and  accept  proposals  from  voluntary  appli- 
cants. The  Newark  Register  for  this  month  contained  a  notice 
to  the  effect  that  "  The  Prudential  Friendly  Society  in  the  State 
Bank  Building  has  found  it  necessary  to  keep  its  office  open  even- 
ings until  half -past  seven  o'clock,  to  transact  business  with  and 
answer  the  inquiries  of  those  who  are  unable  to  get  to  the  office  in 
the  day-time. ' '  Thus,  at  the  very  beginning  the  popular  approval 
and  interest  in  the  new  plan  of  family  insurance  became  manifest 
to  an  extent  hardly  anticipated  by  those  in  charge  of  the  new 
enterprise. 

The  friendly  interest  of  the  Newark  newspaper  press  con- 
tinued, and  from  a  long  article  on  the  subject  of  Industrial  in- 
surance in  the  Sunday  Call  (Dec.  12,  1875),  at  that  time,  as  it  is 
to-day,  the  most  important  and  respected  Sunday  family  news- 
paper issued  in  the  State  of  New  Jersey,  I  abstract  a  few 
remarks  of  more  than  passing  importance  : — 

In  its  population  of  one  hundred  and  thirty  thousand  souls,  Newark  has 
at  least  fifty  thousand  who  belong  to  the  industrial  class.  The  skill  and 
industry  and  prudence  of  these  people  have  raised  our  city  to  its  present 
eminence,  and  given  to  it  its  name  and  fame.  Whatever  affects  their 
interests  is  vital  to  its  well-being.  The  Call  has  been  in  the  past,  and  will 
continue  to  be  in  the  future,  the  champion  of  this  important  portion  of  our 
people,  and  it  will  ever  be  found  to  speak  out  plainly  for  or  against  any 
enterprise  seeking  their  patronage,  according  as  it  shall  merit  censure  or 
approval. 

Following  out  this  line  of  policy,  we  have  closely  scrutinized  the 
Prudential  Friendly  Society,  an  institution  recently  organized  in  this  city 
for  the  benefit  of  working  men  and  women,  or,  more  correctly  speaking, 
for  the  benefit  of  working  people  of  both  sexes  and  all  ages— for  the  Society 
accepts  members  from  one  year  old  up  to  seventy-five.  And  at  the  outset  we 
wish  to  say  that  the  Prudential  is  thoroughly  well  organized,  and  is  founded 
on  a  firm  basis,  managed  by  a  Board  of  Directors  composed  of  some  of  our 
most  substantial  and  honorable  citizens,  and  controlled  by  gentlemen  of 
great  intelligence,  energy  and  ability. 

After  a  lengthy  explanation  of  the  objects  and  methods  of 
the  Society,  the  Call  continued  : — 

In  the  payment  required  the  Society  has  also  carefully  consulted  the 
requirements  of  people  of  limited  means.  Any  benefit  granted  by  the 
Prudential  may  be  paid  for  in  weekly,  monthly,  quarterly,  half-yearly  or 
yearly  contributions.  There  is  not  a  mechanic  or  factory  girl  in  Newark 
who  can  not  spare  a  few  cents  a  week  to  secure  a  benefit  when  sick  and  a 
decent  burial  at  death.  There  is  not  a  prudent,  industrious  father  who 


86  HISTORY  OF  THE   PRUDENTIAL. 

can  not)  without  inconvenience,  pay  a  few  cents  to  insure  a  respectable  burial 
for  his  children. 

At  the  time  we  were  at  the  office  of  the  Society,  which,  by  the  way,  is 
the  State  Bank  building,  812  Broad  Street,  the  Society  was  not  prepared  to 
issue  certificates  of  membership,  yet  many  applications  had  come  in  unso- 
licited, and  were  filed  to  be  acted  upon  as  soon  as  the  Society  was  ready  for 
business.  Among  others  that  were  shown  us  we  noticed  applications  from 
one  whole  family  of  eight  persons— from  the  father,  forty-six  years  old, 
down  to  the  youngest  child,  three  years  old.  All  these  benefits  cost  the 
father  but  a  small  amount  each  week,  a  sum  that  he  could  easily  pay  and 
not  miss  from  his  earnings,  while  he  has  the  satisfaction  of  knowing  that 
in  the  event  of  misfortune  he  and  those  he  loves  are  provided  for. 

The  whole  scheme  of  the  Prudential  seems  so  completely  to  meet  a  need 
in  Newark  that  we  are  confident  the  benefits  of  the  Society  will  be  eagerly 
sought.  It  is  an  institution  established  for  people  of  small  income.  It  is 
modeled  upon  societies  in  Europe  which  have  existed  for  many  years,  and 
have  met  with  igreat  success.  We  believe  the  working  people  of  this 
country  are  unsurpassed  by  any  people  of  the  world  for  prudence,  thrift 
and  industry,  and  we  also  believe  that  the  Prudential,  which  is  the  pioneer 
Friendly  Society  of  America,  will  be  received  with  the  favor  which  its 
merits  deserve. 

This  unqualified  endorsement  of  the  plan  of  the  Prudential 
was  of  special  value  to  the  Society,  since  the  Sunday  Call  was 
then,  as  it  is  at  the  present  time,  strictly  a  family  newspaper,  and 
one  of  far-reaching  influence  among  the  industrial  population  of 
the  city  and  vicinity  ;  and  it  was  of  no  small  importance  to  have 
the  Call  endorse  the  new  plan  of  family  insurance  in  words 
which  were  indicative  not  only  of  a  clear  comprehension  of  the 
system  of  Industrial  insurance,  but  also,  at  the  same  time,  of  the 
needs  and  wants  of  the  industrial  population  of  the  city. 

While  in  its  early  stage  some  business,  or  even  a  considerable 
proportion  of  business,  might  have  been  obtained  by  voluntary 
applications,  it  was  early  evident  that  it  was  necessary  to  employ 
agents,  or  solicitors,  for  the  purpose  of  making  the  merits  of  the 
plan  more  generally  known,  as  well  as  for  the  purpose  of  collect- 
ing the  weekly  premiums,  which  were  gradually  assuming  con- 
siderable proportions.  Accordingly,  the  Society  advertised  for 
canvassers,  and  I  abstract  the  following  from  one  of  the  Newark 
newspapers,  dated  December  18,  1875  :— 

WANTED  ! 

Canvassers  for  the  Prudential  Friendly  Society.  This  first  effort  in 
this  country  to  establish  a  Friendly  Society  worthy  of  the  patronage  of  all 


THE   PRUDENTIAL,   FRIENDLY  SOCIETY,    1876-1877.        87 

classes,  is  meeting  with  a  generous  response.  People  in  these  hard  times 
are  more  than  usually  thoughtful  in  making  provision  for  sickness,  accident, 
old  age,  and  a  burial  fund,  beyond  the  reach  of  the  exigencies  of  business. 
Intelligent  ladies  and  gentlemen  can  secure  good  districts  by  applying  to 

the  principal  office. 

812  BROAD  STREET,   STATE  BANK  BUILDING. 


The  significant  fact  in  this  advertisement  is  that  female,  as 
well  as  male,  agents  were  to  be  employed  as  solicitors  and 
collectors,  and,  while  this  may  not  have  been  the  first  instance  of 
the  employment  of  women  in  the  life-insurance  business,  it 
certainly  was  one  of  the  earliest  experiments  in  this  direction ; 
and  while  the  practice,  in  later  years,  was  discontinued,  there 
are  still  at  the  present  time,  women  agents  employed  in  the 
Industrial  Department  of  the  Prudential  Insurance  Company. 

Every  step  which  had  been  taken  by  Mr.  Dry  den  and  his 
associates  in  the  early  management  of  the  Society  had  been  most 
carefully  considered  to  insure,  if  possible,  complete  success  from 
the  beginning,  not  only  in  matters  of  general  importance,  but 
also  in  minor  details,  likely  to  demand  consideration  at  some 
future  day,  when  the  Society  should  have  reached  considerable 
proportions.  How  thoroughly  in  earnest  Mr.  Dryden  must  have 
been,  and  how  anxious  to  do  justice  to  both  the  Society  and  its 
members,  is  in  no  case  better  illustrated  than  in  his  early  corre- 
spondence with  Mr.  Clark,  who  had  now  been  ofiicially  appointed 
consulting  actuary  of  the  Society. 

In  perfecting  the  Industrial  insurance  contract,  Mr.  Dryden 
considered  fully  and  seriously  the  question  of  surrender  privilege 
of  some  kind  or  another  in  cases  where  policies  had  lapsed  for 
non-payment  of  premiums  within  the  limit  of  grace  granted  by 
the  Society  in  cases  of  default.  Mr.  Dryden  seems  to  have  stated 
his  views  in  detail  to  Mr.  Clark,  who,  under  date  of  November 
22,  1875,  replied  as  follows  : — 

Your  favor  of  the  igth  instant,  asking  my  opinion  as  to  the  advisability 
of  making  some  provision  in  your  Annuity  contracts  by  which  members  may 
receive  some  portion  of  their  contributions  in  case  they  discontinued  their 
payments  after  having  made  them  some  time,  is  before  me,  and  I  answer 
it  as  soon  as  practicable,  after  having  given  it  due  consideration.  I  should 
advise  you  by  all  means  to  deal  equitably  with  such  cases  as  they  arise,  but 
/  hardly  think  it  advisable  to  make  any  stipulation  upon  the  subject  in  your 
contract.  If  you  were  to  do  so,  in  the  case  of  the  Annuity  contract,  to  be 


HISTORY   OF  THE   PRUDENTIAL. 

consistent  you  would  also  have  to  do  so  in  the  case  of  the  sickness  and 
burial-fund  contract,  and  to  make  upon  any  rational  basis  perfectly  definite 
stipulations  that  your  members  could  readily  understand  in  all  these  cases 
would  involve  you,  before  entering  upon  business,  in  no  little  additional 
calculation.  *  *  *  *  It  is,  in  my  judgment,  better  to  derive  the  data 
for  such  calculation  [of  surrender  value]  from  your  own  experience,  than 
either  from  the  best  assumptions  or  the  experience  of  other  societies, 
which  may  have  been  quite  different  from  what  yours  will  be.  I  am  aware, 
of  course,  that  there  is  a  growing  opinion  in  favor  of  such  stipulation  [of 
surrender  value]  which  is  not  without  its  foundation,  and  in  procuring 
business  it  might  be  some  advantage  to  have  them,  but,  upon  the  whole,  / 
should  avoid  them  for  the  present.  For  the  discussion  will  no  doubt  throw 
more  light  upon  the  subject  and  bring  about  more  unanimity  of  opinion, 
as  to  how  such  stipulation  ought  to  be  fixed,  as  well  as  more  unanimity  of 
practice  in  the  allowance  they  contemplate  where  they  are  not  inserted  in 
the  contract,  and  you  can  take  a  step  forward  in  this  direction  at  any 
but  it  will  not  be  easy  to  take  a  step  back. 


This  letter  is  of  more  than  passing  importance,  in  view  of 
latter-day  developments  and  improvements  in  the  Industrial 
insurance  contract.  It  furnishes  historic  proof  of  an  earnest 
effort  on  the  part  of  the  founder  of  the  Prudential  to  grant,  from 
the  start,  a  cash  or  other  surrender  value  to  policy-holders  com- 
pelled to  lapse  their  contracts.  It  is  a  clear  demonstration  of 
the  spirit  of  fairness  and  equity  which  has  characterized  all 
the  business  transactions  of  the  Prudential  with  its  millions  of 
policy-holders,  and  to  which  is  largely  due  the  immense  popu- 
larity of  the  system  from  Maine  to  Colorado.  It  is  made  clear 
by  this  letter,  containing  as  it  does  the  best  available  actuarial 
testimony  of  the  time,  that  if  cash-surrender  privileges  or  paid- 
up  policies  were  not  granted  during  the  early  years  of  the 
Company's  growth,  it  was  because  actuarial  experience  was 
against  such  a  practice  ;  and  while  in  later  years  the  Industrial 
companies,  and  especially  the  Prudential,  made  many  valuable 
and  far-reaching  concessions  on  this  point,  it  was  because  they 
acted  once  more  upon  the  best  actuarial  advice,  and  waited  until, 
in  the  light  of  their  own  experience,  the  way  was  clear  for  grant- 
ing privileges  which,  once  conceded,  could  not,  without  perma- 
nent injury,  be  easily  withdrawn. 

Thus  it  is  shown  that  due  consideration  was  devoted  to  the 
question  of  surrender  values  at  the  very  beginning  of  the  business 
in  this  country,  and  it  is  equally  clear  from  subsequent  results 


THE   PRUDENTIAL   FRIENDLY  SOCIETY,    1876-1877.        89 

that,  of  however  much  theoretical  value  such  concessions  might 
be,  practically  it  was  a  point  of  small  importance  at  the  time, 
since  cases  of  hardship  resulting  from  the  lapsing  of  policies 
could  not  arise  until  such  policies  had  been  in  force  a  considerable 
period  of  time,  while  to  those  who  really  wished  to  remain  mem- 
bers of  the  Society  it  was  easy  to  revive  lapsed  policies  by  the 
payment  of  such  arrears  as  might  have  accumulated.  This,  it  is 
plain,  was  the  view  of  the  public,  which  in  ever-increasing 
numbers  became  patrons  first  of  the  Prudential,  and,  after  1879,  of 
other  Industrial  insurance  companies  which  followed  it,  although 
no  cash  surrender  or  paid-up  provisions  formed  part  of  the  Indus- 
trial contract  until  after  the  business  had  been  some  sixteen  years  in 
successful  existence,  and  some  5,000,000  Industrial  policy-holders 
had  been  secured. - 

Hardly  had  the  Prudential  Friendly  Society  commenced  to 
issue  its  certificates  and  secured  the  local  reputation  and  respect 
of  which  I  have  spoken  at  some  length,  when,  as  it  was  perfectly 
natural  to  expect,  efforts  wera  madei^L. unscrupulous  individuals 
to  float  similar  enterprises,  j apparently  identical  in  scope  and 
method  with  the  Prudentim/but,  as  a  matter  of  fact,  similar  in 
objects  and  aims  with  a  former  type  of  fraudulent  co-operative 
societies.  Had  these  efforts  been  honest  and  straightforward 
nothing  could  be  said  against  them,  but,  being  without  exception 
base  and  plainly  fraudulent  imitations  of  the  Prudential  plan 
of  Industrial  insurance,  they,  for  a  time  at  least,  caused  no 
small  degree  of  anxiety  and  concern  to  Mr.  Dryden  and  his 
associates. 

One  of  the  first  of  these  imitations  of  which  I  have  record, 
and  probably  the  very  first,  was  the  Prudential  league  of 
Harrisburg,  Pa.,  an  organization  chartered  under  the  laws  of 
Pennsylvania,  wTith  the  Governor  of  the  State  as  president.  The 
policies  issued  by  this  society  were,  it  would  seem,  guaranteed  by 
a  regular  life-insurance  company,  somewhat  along  the  lines  of 
the  former  ' '  Bunds  "  or  "  Unions, ' '  to  which  reference  has  been 
made.  There  was,  in  this  effort,  a  clear  intent  to  trade  on  the 
name  of  the  Prudential,  but,  as  was  natural,  the  society,  after  a 
brief  struggle,  by  reason  of  its  inherent  weakness,  was  forced  out 
of  existence. 

It  is  quite  probable  that  the  men  who  managed  the  concern 
were  the  same  who,  during  the  latter  part  of  the  year,  founded 


90  HISTORY  OF  THE   PRUDENTIAL. 

the  Prudential  Mutual  Aid,  also  of  Harrisburg,  Pa. ,  which  had  a 
career  extending  over  several  3^ears,  but  which  also  finally  ended  in 
receivership,  causing  a  not  inconsiderable  loss  to  the  unfortunate 
membership.  The  society  was  based  on  the  principles  of  co-oper- 
ative insurance,  and  was  nothing  more  than  an  attempt  to  defraud 
the  public  by  trading  on  the  name  and  principle  of  the  Prudential, 
which  by  this  time  had  been  recognized  as  a  success  in  the  new 
domain  of  life  insurance  for  the  industrial  population.  Such 
attempts  at  imitation  were  menacing  to  the  Prudential  Society 
only  in  that  the  public  was  likely  to  confuse  the  fraudulent 
practices  of  the  former  with  the  honest  and  straightforward 
efforts  of  the  latter. 

Continued  public  interest  in  the  development  of  the  Pru- 
dential is  evident  from  the  numerous  inquiries  made  as  to  the 
nature  of  the  new  system  of  life  insurance,  which,  I  may  add, 
met  only  with  encouragement  on  the  part  of  those  who  had  the 
management  of  the  Society  in  their  charge  ;  and  perhaps  no 
better  illustration  of  this  growth  of  a  spirit  of  inquiry  can  be 
furnished  than  the  following  open  letter,  addressed  to  the  Newark 
Daily  Advertiser  of  January  17,  1876,  which  throws  a  most  inter- 
esting side-light  on  the  progress  of  the  life-insurance  idea  among 
the  wage-earners  of  the  city  of  Newark  :— 

EDITOR  Advertiser:  The  industrial  classes  of  Newark  are  a  much 
more  important  factor  in  the  prosperity  of  the  city  than  is  usually  consid- 
ered, and  perhaps  more  so  than  any  other,  with  the  possible  exception  of 
capital.  This  class  is  usually  thoughtful  and  often  provident,  and  therefore 
to  the  number  of  thousands  have  become  associated  in  various  societies  for 
mutual  aid  and  protection  in  the  hour  of  need.  No  man  will  attempt  to 
deny  the  value  of  association  for  this  purpose.  But  the  philosopher, 
political  economist  or  whatever  name  is  his  will  see  the  importance  of 
association  upon  a  proper  basis. 

What  is  the  basis  upon  which  these  various  mutual  societies  are  con- 
ducted ?  Is  there  any  mathematical  or  scientific  basis  to  any  of  them  ?  So 
far  as  we  know,  there  is  nothing  beyond  that  which  experience  gives. 
This  is  worth  something,  but  is  it  a  sufficient  guarantee  for  the  future  ? 
Would  the  Life  Insurance  Companies  be  considered  safe  if  their  work  was 
carried  on  by  the  light  of  experience  only  ?  No,  but  the  law  steps  in  and 
requires  them  to  lay  aside  for  every  risk  a  reserve  large  enough  to  meet  that 
risk  at  maturity,  at  old  age  and  death,  and  no  such  company  is  safe,  even  if 
it  has  a  large  amount  of  cash  in  hand,  unless  it  has  a  reserve  sufficient  to 
meet  this  liability  upon  a  thoroughly  mathematical  basis. 

Here,  then,  is  a  great  question  which  concerns  10,000  and  perhaps 
50,000  of  our  industrious  and  clear-headed  mechanics. 


THE   PRUDENTIAL   FRIENDLY  SOCIETY,    1876-1877.       91 

Who  will  take  up  this  subject  and  not  leave  it  until  we  know  where 
they  stand  ? 

Perhaps  the  Board  of  Trade  is  in  the  position  to  do  it.  Certainly r,  the 
subject  is  of  the  greatest  importance  to  Newark,  and  it  is  therefore  worthy 
of  their  attention. 

Let  them  invite  discussion  by  able  minds,  and  if  the  basis  is  insecure 
let  them  memorialize  the  Legislature  that  such  general  laws  may  be  enacted 
as  will  oblige  all  such  societies  to  provide  the  proper  reserve  or  show  what 
is  their  fund  and  what  their  risk,  so  that  people  may  know  what  they  are 
doing  before  they  pay  their  money. 

The  Board  of  Trade  can  do  no  nobler  work  than  throw  their  arms 
around  these  people  and  protect  them  with  their  influence,  their  intelli- 
gence and  procurement  of  proper  laws. 

(Signed)  PROTECTION. 

It  was  not  until  April  29,  1876,  that  the  Advertiser  made 
further  reference  to  the  proposed  investigation  of  the  system  of 
Industrial  insurance  by  the  Board  of  Trade,  and  I  can  do  no 
better  than  quote  the  article  in  full,  as  a  further  contribution  to 
our  knowledge  of  the  development,  at  this  period,  of  the  Indus- 
trial insurance  idea  in  the  city  of  Newark  among  all  classes  of 
the  population  : — 

It  is  suggested  to  the  Board  of  Trade  that  it  invite  information  upon 
the  system  of  industrial  insurance  that  has  recently  been  introduced  by  the 
Prudential  Friendly  Society.  This  is  a  matter  that  would  legitimately 
come  before  such  a  body,  and  one  which,  as  large  employers,  the  members 
are  directly  interested  in.  This  system  aims  to  improve  the  condition  of 
the  class  of  people  upon  whom  these  gentlemen  depend  for  skill  and 
industry  in  the  various  departments  of  business  activity.  It  makes  them 
provident  and  self-reliant.  It  encourages  thrift  and  good  morals,  and 
assists  in  producing  useful  mechanics  and  law-abiding  citizens.  Our  large 
employers  well  understand  that  money  can  not  be  better  expended  even  as 
a  matter  of  economy — we  say  nothing  from  the  humanitarian  standpoint — 
than  when  used  in  elevating  the  condition  of  their  help.  But  when  the 
hands  can  themselves  be  induced  to  take  a  wise  thought  and  provide  for 
the  future,  it  greatly  lifts  them  up.  This  is  the  beneficence  of  this  system 
of  industrial  insurance.  Some  of  our  largest  employers  deem  this  matter 
so  important  that  they  establish  associations  among  their  employees  and 
require  each  person  to  contribute  weekly  to  the  fund.  But  the  limited 
number  of  hands  employed  by  most  establishments  makes  this  impracti- 
cable with  them,  and  therefore  the  great  mass  of  the  industrial  class  must 
look  for  protection  to  some  public  institution  that  carries  on  the  business. 

Now,  it  is  important  to  employer  as  well  as  employed  that  trust  should 
be  placed  in  a  really  solvent,  reliable  institution.  Herein  the  gentlemen 
who  compose  the  Board  of  Trade  can  greatly  aid  the  people  by  becoming 
themselves  well  informed  and  imparting  information  to  their  employees. 


92  HISTORY   OF  THE   PRUDENTIAL. 

Will  the  Board  invite  some  competent  gentleman  to  address  them  upon 
the  subject  of  industrial  insurance?  The  success  of  the  Prudential  clearly 
indicates  the  importance  of  the  matter.  This  Society,  recently  organized, 
in  the  midst  of  hard  times,  with  a  system  untried  in  this  country,  sought 
patronage  almost  entirely  among  people  of  limited  means,  and  confined  its 
operations  to  the  city  of  Newark,  yet  it  has  already  received  over  4,000 
members.  Doubtless  the  character  of  its  officers  and  directors  has  done 
much  to  inspire  confidence  and  popularize  the  institution.  But  back  of 
this  lies  the  fact  that  the  industrial  classes  appreciated  and  eagerly 
embraced  its  provisions.  They  needed  the  Society.  We  may  accept  this 
as  evidence  that  this  is  only  the  germ  of  a  system  which  is  to  grow  up  and 
exercise  a  great  influence  upon  the  social  condition  of  the  workingman  of 
America.  It  has  already  done  so  in  England,  where  8,000,000  people  now 
are  interested  in  this  class  of  provident  associations.  It  is  probable  that 
there  will,  in  a  few  years,  be  as  great  a  number  interested  in  similar  institu- 
tions in  America.  It  is  important  in  the  infancy  of  the  business,  and 
before  mistakes  are  made  that  can  not  be  corrected,  that  there  shall  be  had 
a  full  knowledge  of  those  laws  that  regulate  the  risks  attached  to  sickness 
and  burial  insurance.  The  Odd  Fellows,  Knights  of  Pythias,  and  all 
kindred  associations  are  deeply  interested  in  the  matter.  A  proper  knowl- 
edge as  to  whether  their  rates  of  contributions  are  sufficient  to  enable  them 
to  pay  in  the  future  the  benefits  they  promise,  is  of  vital  importance  to 
them,  and  a  movement  such  as  we  have  suggested  on  the  part  of  the  Board 
of  Trade  would  start  an  inquiry  that  would  result  beneficially. 

One  of  the  most  suggestive  remarks  in  this  quotation  is  the 
sentence  that  ' '  We  may  accept  this  as  evidence  that  this  is  only 
the  germ  of  a  system  which  is  to  grow  up  and  exercise  a  great  in- 
fluence upon  the  social  condition  of  the  workingman  of  America. ' ' 
These  were  truly  prophetic  utterances  at  a  time  when  hardly  the 
foundation  had  been  securely  laid  of  the  first  Industrial  insurance 
company  in  this  country. — a  company  which  at  the  present  time 
has  a  large  portion  of  the  population  of  Newark  insured  on  its 
plans  of  Industrial,  Intermediate  or  Ordinary  life  insurance  ;  a 
company  which  at  the  present  time  has  more  than  3,500,000 
Industrial  policies  in  force  on  its  books  on  the  lives  of  American 
working  people,  and  has  indeed  grown  into  an  institution  of 
great  influence  upon  the  social  condition  of  the  workingmen  of 
America. 

The  early  success  of  the  Society  had  been  little  short  of 
marvellous,  and  by  May  22,  1876,  the  five- thousandth  application 
for  Industrial  insurance  had  been  received.  The  difficulties 
which  had  been  experienced  had  not  been  sufficient  to  hinder 
materially  the  rapid  growth  of  the  Society  in  various  directions, 


THE   PRUDENTIAL  FRIENDLY  SOCIETY,    1876-1877.       93 

but,  as  has  previously  been  pointed  out,  the  fraudulent  imita- 
tions of  concerns  operating  under  similar  names  and  following 
similar  plans  were  likely,  in  course  of  time,  to  prove  a  serious 
menace  to  the  good  name  and  standing  of  The  Prudential.  The 
difficulties  experienced  in  obtaining  the  services  of  good  and  reli- 
able agents  had  often  made  it  necessary  to  discharge  inefficient 
employees,  who  would  make  use  of  their  limited  experience  to 
establish  societies  or  associations  under  names  similar  to  the 
Prudential.  Thus,  about  April,  1876,  The  Prudential  Benefit 
Society  had  been  organized  in  Newark  by  two  men  discharged 
from  the  service  of  The  Prudential  Friendly  Society.  The 
Newark  Sunday  Call,  under  date  of  April  2,  1876,  found  it 
necessary  to  call  public  attention  to  the  danger  of  confusing  a 
solvent  society  with  insolvent  imitations. 

However,  in  spite  of  such  discouragements  and  disadvan- 
tages, the  Society  continued  to  make  progress,  and  by  December 
31,  1876,  there  were  4,816  policies  in  force,  for  an  aggregate 
amount  of  insurance  protection  of  $443,072.  The  total  premium 
income  during  this  year  had  been  $14,495,  of  which  $1,956  had 
been  paid  for  claims.  The  total  expenses  for  the  year  had 
reached  $16,253,  or  $i ,  758  more  than  the  income.  The  deficiency, 
together  with  the  necessary  amount  to  be  held  as  reserve,  had,  of 
course,  been  paid  in  by  the  stockholders  ;  and  thus,  after  almost 
fifteen  months  of  actual  experience  in  business  operations,  the 
Society  was  far  from  being  in  a  prosperous  condition  financially, 
although,  in  the  nature  of  the  business,  nothing  else  could  have 
been  expected  for  a  number  of  years,  or  until  the  business  should 
have  become  self-sustaining. 


94  HISTORY   OF  THE   PRUDENTIAL. 


CHAPTER  VII. 

THE   PRUDENTIAL   INSURANCE   COMPANY 
OF   AMERICA,    1877-1879. 

Thus  far  the  business  of  the  Society  had  practically  been  lim- 
ited to  the  city  of  Newark,  but  by  November,  1876,  it  was 
decided  to  extend  business  operations  to  other  cities  of  the  State. 
Before  this  important  step  was  taken  it  had  been  arranged  for 
Mr.  Dryden  to  visit  England  for  the  purpose  of  making  a  personal 
study  of  the  methods  and  results  of  the  British  Prudential  and  the 
large  Friendly  Societies  operating  in  the  various  parts  of  the 
kingdom,  and  with  this  object  in  view  he  sailed  for  Liverpool  on 
November  28th,  fully  supplied  with  letters  of  introduction,  not 
only  to  the  managers  of  the  leading  societies  and  companies,  but 
also  to  the  leading  actuaries  and  government  officials  connected 
with  the  administration  of  the  various  insurance  institutions  and 
Friendly  Societies.  This  local  investigation  of  conditions  affecting 
Industrial  insurance  in  England  had  become  more  and  more  im- 
perative as  the  business  of  the  Society  had  increased,  and  experi- 
ence was  gained  which  permitted  of  a  careful  study  of  the  proba- 
ble normal  rate  of  mortality  and  sickness  among  insured  lives  in 
this  country.  Hence  the  importance  of  a  personal  investigation, 
on  the  part  of  Mr.  Dryden,  of  the  actual  conditions  affecting 
Industrial  insurance  in  England,  and  the  necessity  of  a  personal 
study  of  the  causes  and  reasons  that  induced  the  Prudential,  the 
Royal  lyiver  and  other  societies  to  abandon  the  sickness  branch  of 
their  business  after  a  short  experience,  which,  it  is  clear,  must 
needs  have  been  unfavorable.  Without  entering  extensively  into 
the  question  as  to  why  the  American  Prudential  finally  followed 
in  the  steps  of  the  English  companies  in  abandoning  its  sickness 
branch,  it  may  briefly  be  stated  that  partly  on  account  of  the 
small  demand  for  such  insurance  in  this  country,  partly  on 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  1877-' 79.         95 

account  of  the  inherent  difficulty  of  transacting  this  form  of 
insurance  on  a  profitable  basis,  the  Society,  after  having  given 
this  branch  of  the  business  a  fair  trial,  finding  it  impossible  to 
transact  the  same  profitably  or  safely,  followed  other  companies 
in  limiting  its  business  to  whole-life  policies  on  the  level-premium 
plan. 

It  may  not  be  out  of  place  to  add  the  words  of  Mr.  (now  Sir) 
Henry  Harben  in  explaining  to  the  Royal  Commission  on 
Friendly  Societies  the  reasons  as  to  why  his  company  had 
discontinued  transacting  a  sickness  insurance  business.  Mr. 
Harben  stated  that,  as  a  matter  of  fact,  his  company  found 
that  "it  did  not  pay,"  and,  further,  that  "We  found  that  we 
were  totally  unable  to  cope  with  the  fraud  which  was  prac- 
ticed," and  hence  Mr.  Harben' s  conclusion  that  "We  have 
tried  it,  and  I  think  our  agents  are  the  most  honest,  and  we 
can  not  manage  it. "  * 

During  his  stay  in  Kngland  Mr.  Dryden  gained  much 
additional  information,  and  became  so  thoroughly  informed  as  to 
the  most  minute  details  of  the  vast  business  of  the  British  Pru- 
dential that  on  his  return  he  not  only  materially  changed  the 
practical  working  basis  of  the  Society,  but  at  once  took  steps  to 
have  the  same  reorganized  on  a  purely  commercial  basis  as  the 
Prudential  Insurance  Company  of  America,  which  change  in 
name  took  place  by  an  amendment  to  the  charter  of  The  Pru- 
dential Friendly  Society,  which  passed  the  New  Jersey  Legisla- 
ture during  the  session  of  1877,  and  became  a  law  on  March  i5th 
of  that  year.f 

Thus  far,  as  has  been  stated,  the  business  operations  of  the 
Prudential  had  been  almost  entirely  confined  to  the  city  of 
Newark,  but  after  Mr.  Dryden' s  return  from  England  steps  were 
immediately  taken  to  open  offices  in  other  cities  of  the  State. 
This  was  not  only  in  accordance  with  the  laudable  ambition  to 
increase  the  business  of  the  company,  but  was  also  due  in  no 
small  degree  to  a  yielding  to  pressure  brought  to  bear  on  the 


*  Third   Report    of    the    Royal    Commission    on   Friendly   Societies, 
1873,  P-  73- 

t  lyife  Insurance  Charters,  p.  154.     The  Spectator  Company,  New  York, 
1895. 


96  HISTORY  OF  THE   PRUDENTIAL. 

managers  of  the  Company  by  leading  citizens  of  surrounding 
towns,  who  by  this  time  had  fully  realized  the  value  of  Industrial 
insurance  from  the  standpoint  of  the  taxpayer  and  public-spirited 
citizens  interested  in  the  betterment  of  the  economic  and  social 
condition  of  the  industrial  masses. 

Next  to  Newark,  the  most  important  manufacturing  city  in 
the  State  in  1877  was  Paterson,  which  in  that  year  had  an  esti- 
mated population  of  about  43,000,  and  which,  according  to  the 
Census  of  1880,  was  one  of  the  most  important  manufacturing 
centres  in  the  United  States.  During  the  early  part  of  Aprilr 
leading  citizens  of  Paterson,  including  Mr.  Garret  A.  Hobart, 
the  late  Vice-President  of  the  United  States,  addressed  a  letter  to 
the  President  of  the  Prudential,  requesting  a  public  explanation 
of  the  essential  principles  of  Industrial  insurance.*  The  following 
is  a  copy  of  the  letter  received  by  the  Company  : — 

PATERSON,  April  6,  1877. 
AU,EN  L.  BASSETT,  ESQ., 

President  of  the  Prudential  Insurance  Company  of  America,  Newark,  N.  J. 

Dear  Sir :  Understanding  that  your  Company  is  about  to  open  an 
office  here  for  the  transaction  of  its  business  with  the  citizens  of  Paterson, 
we  the  undersigned  beg  leave  to  request  that  you  will  address  a  public 
meeting  of  citizens  interested  in  this  new  system  of  Insurance,  in  some 
public  Hall,  and  at  such  time  as  may  suit  your  convenience,  and  explain  its 
peculiar  features. 

Yours  Respectfully, 

JOHNJ.  BROWN, 
JOHN  SWINBURNE, 
BENJAMIN  BUCKLEY, 
GEORGE  WURTS, 
THOS.  N.  DAI.E, 
SOCRATES  TUTTI,E, 
GARRET  A.  HOBART. 


*  Such  lectures  and  public  meetings  on  the  subject  of  Industrial  insur- 
ance were  quite  common  during  the  early  days  of  the  business,  and  much 
good  was  accomplished  by  placing  the  merits  of  the  "new  departure" 
plainly  and  emphatically  before  the  people. 


THE 


INSURANCE    COMPANY 


HOME   OFFICE, 

JEBSST. 


CHARTER 

5s  S3  E3  £»  IE3  "37  "OVA.  I» . 


Huolu  all  ftteit  1)5  tljciif  presents,  That  THE  PRUDENTIAL  INSURANCE  COMPANY  OF  A.MERICA,  in  consid- 
eration of  the  representations  find  agreements  made  to  "and  with  them,  in  the  application  for  this  Policy,  respecting 
tiie  health,  habits  and  condition  of  the  person  named  and  described  in  the  first  column  of  the  schedule  embodied 
herein,  and  also  respecting  any  matter  upon  which  this  contract  is  based,  and  in  further  consideration  of  the  sum  of 
money,  stated  in  the  second  column  of  said  schedule,  to  them  in  hand  paid,  and  of  a  like  sum  to  be  paid  to  said 
Company,  or  their  authorized  Agent,  on  or  before  each  and  every  Monday  subsequent  to  the  date  hereof,  during  the 
lifetime  of  said  person,  doth  hereby  promise  and  agree  that,  upon  satisfactory  proof  of  the  decease  of  said  person, 
they  will  pay,  or  cause  to  be  paid  (subject  to  the  articles,  conditions  and  agreements  endorsed  hereon),  unto  his  or 
aer  executors  or  administrators,  the  sum  of  money  stated  in  the  third  column  of  said  schedule. 

}3fOt)  t'JJrt  altOagB,  that  the  production  by  or  on  behalf  of  this  Company,  Its  successors  or  assigns,  of  a  receipt,  of  the  description 
hereinafter  mentioned,  for  the  sum  of  money  insured  hereby,  or  of  other  sufficient  proof  of  payment  by  said  Company  of  said  sum  of  r:  one? 
to  any  or  either  of  the  persons  hereinafter  mentioned  .and  described,  and  hereby  authorized  and  empowered  to  sign  said  receipt  for  unit 
jeeeive  the  said  sum  of  money,  said  receipt  being  signed  by  any  person  being  either  an  executor  or  an  administrator,  husband  or  wife  or 
relative  by  blood  or  connection  by  marriage  of  the  person  designated  in  the  first  column  of  the  schedule  embodied  herein,  shall  be  final  end 
conclusive  evidence  to  all  Intents  and  purposes  that  such  sum  has  been  duly  paii'  unto  and  received  &y  ,d&  person  or  persons  lawfully  and 
flghtfully  entitled  to  receive  the  same,  and  that  all  claims  and  demands  whatsoever,  upon  or  against  uiis  Company  to  isspeet  to  tins  Polity, 
iuive  been  fully  satisfied. 

$rOt)OJrtJ,  t)0toetorr,  that  this  Policy  is  issued  and  accepted  subject  to  the  restrictions,  conditions  and  agreements  Itorato 
jwnexed,  which  it  Is  agreed  form  part  of  this  contract,  and-upon  the  express  stipulation  that  this  contract  shall  become  absolutely  vofW, 
and  all  premiums  paid  thereon  forfeited  to  said  Company,  if  the  considerations  for  which  the  same  is  granted  are  not  true,  or  shall  not  >K 
tn  all  respects,  performed  and  observed ;  or  if  the  said  person  shall,  without  the  .written  consent  of  said  Company  endorsed,  hereon,  «* 
beyond  the  settled  limits  of  the  United  States,  or  the  British  Provinces,  id  North  America;  or  if  the  said  person  shall  die  by  the  hands  el 
justice  or  by  suicide,  whether  sano>or  insane,  or  in  consequence  of  the  use  of  intoxicating  drinks,  opiates  or  narcotics;  or  of  being  engaged 
In  any  unlawful  act ;  or  if  the  said  person  shall  have  previously  obtained,  from  said  Company,  a  Policy  which  shall,  at  the  decease  of  said 
person,  be  in  force,  insuring  a  sum  of  money  in  consequence  of  his  or  her  decease,  unless  the  Policy  first  issued  contains  express  permission 
•that  this  Policy  may  also  be  in  force  at  the  same  time. 


%\ 

Y 

FIRST  COLUMN.     ' 

SECOND 

COM  MN. 

THIRD  COLUMN. 

SUM   INSURED, 

Subject  to  the  conditions 
endoned  hereon. 

Ctt. 

#  

. 

K«  <H3tfneSfl  JHIIJftTOf,  the  President  and  Secretary  of  said  Company  have  signed  these  presents,  and  attached  the  Policy 
Stamp  of  the  Company,  at  the  City  of  Newark,  New  J«rsey,  this 


Secretary, 


ipresiJent. 


FIRST   INDUSTRIAL   POLICY   FORM   USED   BY 
THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 


CONDITIONS  AND  AGREEMENTS  HEREIN  BEFORE  REFERRED  TO. 


1.  The  statements  and  declarations  nude  In  the  applica- 
tion for  tbis  Policy  are  in  all  respects  full  ur.d  true, 
and  the  said  application "ia  hereby  referred  to,  and 
made  a  part  of  this  contract. 

&  The  person  insured  under  this  Policy  shall  not,  with- 
out  the  written  consent  of  the  Company,  eater  into 
any  military  or  naval  service  (except  the  militia, 
when  not  in  actual  service),  or  engage  in  the  manu- 
facture of  gunpowder,  fire-works,  or  other  explosive 
gnbetancts,  or  submarine  operations. 

r.  If  the  person  insured  under  this  Policy  shall  die 
within  six  months  from  the  date  hereof,  the  Com- 
pany shall  be  liable  to  pay  one-fourth  only  of  the 
amount  specified  in  this  policy.  If  the  said  person 
•hall  die  after  six  months,  and  within  one  year  from 
the  date  hereof,  the  Company  shall  be  liable  for 
one-half  only  of  the  amount  specified  in  the  policy. 
If  the  said  person  shall  die  after  one  year  from  the 
uate  hereof,  the  whole  amount  specified  in  this 
Policy  shall  be  payable. 

>.  It  any  erasure  or  alteration  snail  b«  made  in  this 
Policy,  except  by  endorsement  made  and  signed 
by  an  officer  of  the  Company,  the  Policy  shall  be  void. 

*.  If  any  attempt  shall  be  made  by  any  person  or  per- 
sons interested  in  this  Policy  to  obtain  money  from 
the  Company,  under  this  Policy,  upon  any  false  or 
fraudulent  claim  or  representation,  then  the  said 
Company  shall  have  the  right  to  cancel  this  Policy, 
without  notice  to  such  person  or  persons ;  and  the 
said  person  or  persons  shall  thereupon  forfeit  aU 
rights  and  privileges  In  the  Company. 

<V  This  Policy,  and  the  Recent  Book  In  whi<a  an 
er»«red  the  premiums  paid  on  the  same,  shall,  at 
all  times,  on  application  of  any  authorized  officer 
or  servant  of  the  Company,  be  produced  and  ex 
hlbltei?  to  hto :  and  -uoon  anv  oawuant  bv  the 


Company,  under  this  PoUcy,  they  shall  nave  the 
right  to. demand  and  retain  possession  of  said  Policy 
and  Receipt  Book. 

7.  If,  for  any  cause,  this  Insurance  shall  terminate,  all 
premiums  paid  on  account  thereof  shall  be  forfeited 
to  the  Company,  and  all  liability  on  the  part  of  the 
Company  under  this ,  policy  shall  cease ;  and  in  easo 
for  any  reason  the  Company  shall  not  attend  to  the 
collection  of  premiums  payable  on  this  policy 
through  its  agent  or  collector,  it  shall  be  the  duty 
of  the  policy-holder  (within  the  time  allowed  by  the 
Company)  to  bring  or  send  said  premiums  to  .tae 
home  office  or  to  the  Company's  agent,  and  in 'event 
of  the  failure  of  the  policy-holder  to  perform  this 
duty,  the  Company  may  cancel  this  policy  without 
notice  to  any  person  or  persons  interested  therein, 
any  statute  to  the  contrary  notwithstanding. 

6.  No  suit  or  action  at  law  or  in  equity  shall  be  main- 
tainable to  enforce  the  performance  of  this  contract 
until  fifteen  days  shall  have  expired  after  the  filing 
In  the  principal  office  of  the  Company  of  the  above- 
mentioned  proof,  nor  unless  such  suit  or  action  shall 
be  commenced  within  six  months  next  after  the 
decease  of  the  person  insured  under  this  policy; 
and  it  is  expressly  agreed  that  should  any  such  suit  or 
aotien  be  commenced  after  .the  expiration  of  said  siz 
months,  the  lapse  of  time  shall  be  deemed  as  conclu- 
sive evidence  against  the  validity  of  snch  claim,  any 
statute  of  limitations  to  the  contrary  notwithstanding. 

9.  No  payments  of  premium  made  on  this  policy  while 

it  is  in  force  will  be  recognized  by  the  Company 
as  valid  or  binding  unless  made  to  a  duly  authorized 
agent,  and  by  such  agent  entered  at  fte  time  of 
payment  In  the  Premiam  Receipt  TBook  belonging 
with  this  Policy. 

10.  Agents  are  not  authorized  to  make,  alter,  or  dis- 
charge  contracts;  or  waive  forfeitures;  or  receive 
premiums  on   policies  in  arrears  beyond  the  «fcn« 
allowed  by  the  regulations  of  the  Company. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  1877-79.         97 

To  this  letter  Mr.  Bassett,  in  behalf  of  the  Company,  replied 
as  follows  : — 

NEWARK,  N.  J.,  April  7,  1877. 

MESSRS.  JOHN  J.  BROWN,  BENJAMIN  BUCKLEY  AND  OTHERS. 

Gentlemen :  It  will  afford  me  pleasure  to  accept  your  kind  invitation, 
and  I  will  name  Thursday  Evening,  I2th  inst.,  at  a  X  before  8  o'clock, 
at  Odd  Fellows'  Hall,  Main  Street,  as  the  time  and  place.  During  the  last 
year  of  unparalleled  "  hard  times  "  we  issued  9,000  Policies  to  the  citizens 
of  Newark  alone,  and  I  can  not  see  why  the  great  beneficence  which 
accrued  to  our  people  by  reason  of  its  liberal  provisions,  should  not  be 
furnished  to  the  people  of  your  City.  This  is  a  great  step  towards  the 
people,  providing  as  it  does,  some  insurance  to  the  poorest  or  the  richest, 
male  and  female,  and  from  i  to  76  years  of  age,  for  a  payment  of  3  cents  a 
week  and  upwards.  I  believe  it  worthy  of  the  attention  of  all  your  people. 

Very  Respectfully,  your  Obedient  Servant, 

AI,I,EN  L.  BASSETT, 
President  Prudential  Insurance  Company. 

The  above  letter  proves  clearly  the  public  interest  in  the 
new  form  of  life  insurance,  and,  by  implication,  the  local  need  of 
some  such  form  of  a  voluntary  method  of  enabling  the  factory- 
workers  and  others  to  make  secure  provision  for  funeral  expenses 
and  the  cost  of  medical  attendance  in  a  manner  suitable  to  their 
social  and  economic  conditions. 

Among  other  leading  newspapers  of  Paterson,  the  Pater  son 
Guardian,  one  of  the  oldest  newspapers  in  New  Jersey,  gave 
emphatic  endorsement  to  the  plan  of  the  Prudential,  referring  to 
it  as  ' '  practical  insurance, ' '  adding  that  "we  do  not  see  why  it 
should  not  be  placed  within  the  reach  of  everybody. ' '  Inciden- 
tally, mention  was  made  of  the  fact  that  the  Company  had  already 
extended  its  operations  to  Jersey  City,  Hlizabeth  and  Hoboken, 
while  the  average  issue  of  new  policies  had  then  reached  250 
policies  a  week. 

That  there  was  a  similar  demand  for  Industrial  insurance  in 
Pennsylvania  is  proven  by  frequent  references  to  the  subject  in  the 
Insurance  World,  published  at  Pittsburg,  Pa.,  agitating  for  the 
opening  of  Industrial  offices  in  that  State. 

In  Jersey  City,  where  an  office  had  been  established  during 
the  early  part  of  1877,  the  leading  newspaper,  the  Jersey  City 
Journal,  in  its  issue  of  June  23,  1877,  referred  to  the  Prudential 


98  HISTORY   OF  THE   PRUDENTIAL. 

as  follows  :  "  The  secret  of  this  success  is,  we  take  it,  not  only 
the  tact  and  energy  with  which  the  enterprise  has  been  managed, 
not  even  the  eminent  respectability  of  its  Board  of  Directors, 
though  these  have  contributed  much  to  it,  but  it  is  mainly  in  the 
fact  that  this  feature  of  insurance  supplies  a  need  which  the 
industrial  classes  have  felt.  They  now  have  the  opportunity  of 
making  a  small  provision  for  their  families,  on  easy  terms.  We 
doubt  not  the  opportunity  will  be  gladly  embraced  here,  as  it  has 
been  elsewhere,  and  that  it  will  result  in  a  positive  advantage  to 
our  people." 

Thus  during  its  early  career  the  Company  was  welcomed 
wherever  it  opened  its  offices,  as  a  useful  factor  in  a  much- to-be- 
desired  amelioration  of  the  condition  of  the  industrial  population  ; 
while  at  the  same  time  eminent  citizens,  as  well  as  the  public 
press,  recognized  clearly  the  fact  that  Industrial  insurance  was 
most  likely  to  meet  a  want  on  the  part  of  the  masses,  which  thus 
far  had  not  been  met  by  any  other  of  the  large  number  of  so- 
called  insurance  institutions. 

While  some  satisfactory  progress  had  been  made,  outside 
factors  did  much  to  hinder  the  financial  and  general  progress  of 
the  Company.  Aside  from  the  general  distrust  of  the  public  in 
all  matters  of  life  insurance,  in  consequence  of  the  many  failures 
of  companies  in  other  States,  there  also  occurred  this  year  the 
failure  of  a  company  having  its  home  office  in  the  city  of  Newark, 
which  proved  a  most  serious  matter  to  all  the  other  insurance 
companies  transacting  business  in  the  State  of  New  Jersey. 

The  New  Jersey  Mutual  Life  Insurance  Company  had  been 
organized  in  1865,  and  during  its  early  years  had  been  in  the, 
hands  of  some  of  the  leading  citizens  of  the  State.  For  reasons 
which  can  not  be  discussed  here,  the  company  had,  in  1872,  come 
under  the  control  of  outside  parties,  who  at  once  began  opera- 
tions which  soon  involved  the  concern  in  financial  difficulties,  and 
finally  brought  about  the  bankruptcy  of  the  company.  As  late 
as  August,  1874,  the  company  had  been  examined  by  EHzur 
Wright,  who  reported,  as  the  result  of  his  examination,  that  he 
' '  found  no  reason  why  its  policy-holders  should  be  dissatisfied  or 
distrustful. ' '  *  But  proof  was  soon  forthcoming  which  made  it 
clear  that  the  company,  at  the  time  of  its  examination,  was  not 


New  Jersey  lyife  Insurance  Report  for  1877. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  iff-jq.        99 

in  a  sound  condition,  and  that  Mr.  Wright  and  his  examiners 
had  been  ' '  deliberately  and  wofully  deceived. ' '  The  cause  of 
the  failure  was  due  to  nothing  else  than  criminal  mismanagement, 
and  under  date  of  December  16,  1876,  Mr.  David  Parks  Fackler 
made  a  further  examination  which  disclosed  a  most  stupendous 
fraud,  proof  of  fraudulent  mortgages  and  fictitious  bank  balances, 
of  borrowed  bonds  and  unstated  liabilities,  illegal  loans  and  the 
fraudulent  attempt  to  reinsure  the  business  of  the  company  in 
another  concern  in  a  similar  shaky  condition. 

The  effect  of  this  failure  can  readily  be  understood  by  any  one 
familiar  with  the  effect  of  public  distrust  on  financial  institutions  ; 
and  when  I  add  that  the  loss  to  policy-holders  was  estimated  at 
$965, 1 61  in  cash,  to  say  nothing  of  the  amount  of  insurance  protec- 
tion lost  to  the  unfortunate  policy-holders,  it  will  be  apparent 
why  such  a  calamity  must  needs  have  proven  a  serious  check  to 
the  business  development  of  a  young  company  offering  to  the 
working  people  life  insurance  on  a  new  and,  for  the  time,  rather 
novel  plan. 

Considering  all  the  difficulties  and  drawbacks  indicated,  it  is 
remarkable  that  during  the  year  1877  no  less  than  10,521  new 
policies  for  a  sum  of  $967,000  should  have  been  issued  by  the 
Prudential,  while  11,226  policies  for  $1,030,655  remained  in  force 
at  the  end  of  the  year.  Comparing  this  result  with  the  fact  that 
at  the  close  of  the  preceding  year  only  4,816  policies  for  $443,000 
remained  in  force,  we  have  a  substantial  gain  in  business  of  more 
than  loo  per  cent.  During  a  year,  in  many  respects  a  most  dis- 
astrous one  from  a  life-insurance  standpoint,  the  new  system  of 
life  insurance  had  continued  to  make  progress,  although  all  the 
old-line  companies  operating  in  New  Jersey  actually  suffered  a 
material  decrease  in  their  amount  of  insurance  in  force.  In 
marked  contrast  to  the  success  of  the  Prudential,  according  to 
the  official  report  of  the  Insurance  Department  of  New  Jersey, 
twenty-six  companies  operating  in  the  State  on  the  level-premium 
plan  decreased  in  business  from  19,266  policies  in  force  at  the  end 
of  the  year  1876  to  17,339  policies  in  force  at  the  close  of  the  year 
1877. 

The  total  income  of  the  Prudential  during  1877  had  reached 
$30,868,  while  the  expenses  and  claim  disbursements  amounted 
to  $24,175.  On  the  basis  of  a  gross  valuation  the  assets  of  the 
Company  were  $26,906,  against  which  there  were  liabilities  of 


IOO 


HISTORY  OF  THE   PRUDENTIAL. 


$20,791,  showing  a  small  but  sufficient  surplus.  The  business  of 
the  Company,  at  the  end  of  the  year,  consisted  of  11,226  policies, 
divided  as  follows,  according  to  the  three  branches  into  which  the 
business  transactions  were  divided  : — 


BUSINESS   OF  THE   PRUDENTIAL  INSURANCE  COMPANY 
OF  AMERICA. 

DECEMBER  31,  1877. 


NO. 

AMOUNT. 

Whole-Life  Branch    

jo  627 

$1  O27  7^1    OO 

Sickness  Branch,    

SQ4 

2,304  oo 

Annuity  Branch,     ...               ... 

600  oo 

Total 

II  226 

$i  o^o  6^1  oo 

It  is  quite  clear  that  the  sickness  and  annuity  branches  of 
the  Company's  business  had  assumed  only  small  proportions,  and 
the  bulk  of  the  business  was  in  whole-life  policies  for  sums  pay- 
able at  death.  The  result  of  the  year's  experience  had  therefore 
been  emphatically  in  favor  of  the  transaction  of  a  whole-life 
business,  and  indicative  of  only  a  limited  demand  for  sickness 
insurance  and,  further,  indicative  of  no  commercial  demand  for 
deferred  annuities  on  the  plan  offered  by  the  Company. 

Thus  far  the  business  of  the  Company  had  been  transacted 
in  the  basement  of  the  State  Bank  building,  812  Broad  Street, 
but  the  increase  in  clerical  work  demanded  larger  quarters,  and 
the  offices  of  the  Company  during  the  early  part  of  1878  were 
moved  to  215  Market  Street.  As  an  indication  of  the  economy 
necessary  to  be  practiced  at  this  time,  I  may  add  that  the  new 
quarters,  which  were  three  times  as  large  as  the  old,  were  secured 
at  a  rental  of  only  two-thirds  of  what  had  been  paid  for  the 
former  offices. 

The  success  of  the  Prudential  gradually  attracted  the  atten- 
tion of  other  companies,  and,  but  for  the  prevailing  financial 
crisis,  other  attempts  in  the  direction  of  organizing  Industrial 
companies  would  no  doubt  have  been  made.  But  money  seeking 
investment  was  not  likely  to  be  attracted  to  new  life-insurance  ven- 
tures at  a  period  when  the  whole  business  was  practically  under  a 


1 


HOME   OFFICE   OF 

THE;  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA, 
1878-1883. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  ijJ-jg.      IOI 

shadow  and  partly  in  disgrace,  and  thus  the  Prudential  remained 
alone  in  the  field  for  some  time  to  come.  The  subject,  however, 
was  kept  so  fully  before  the  insurance  companies,  through  the  me- 
dium of  the  insurance  press,  by  comments  on  the  great  success  of 
the  English  Prudential  and  the  limited  success  of  the  American 
company  of  the  same  name,  that  it  was  only  a  question  of  time — 
in  fact,  of  only  a  few  months — when  improved  financial  conditions 
would  make  possible  the  launching  of  new  enterprises  in  the  field  of 
Industrial  insurance.  A  half-hearted  effort  was  made  in  the  early 
part  of  the  year,  by  the  John  Hancock  Mutual  I^ife  Insurance 
Company  of  Boston,  which  attempted  to  transact  what  it  called 
a  "  Prudential  business  "  on  the  monthly-premium  payment  plan, 
offering  insurances  for  sums  as  low  as  $250  ;  but  the  experiment 
was  not  a  success. 

It  is  difficult  to  explain  why  the  monthly-premium  payment 
plan  should  so  invariably  have  proven  a  practical  failure,  but 
the  bare  fact  remains  that  the  people  do  not  seem  to  care 
for  this  kind  of  insurance,  even  though  the  plan  is  actually  the 
cheaper  in  comparison  with  the  weekly  plan  of  general  Industrial 
insurance. 

All  efforts  of  this  kind,  however,  had  their  value,  in  that 
they  made  clear  the  attitude  of  the  public  in  its  preference  for  life 
insurance  on  the  weekly-premium  payment  plan,  and  it  was  for- 
tunate that  every  possible  species  of  workingmen's  insurance  was 
tried  either  before  or  at  the  same  time  that  Industrial  insurance 
was  passing  through  the  early  stages  of  its  development  in  this 
country.  If  the  new  plan  of  insurance  had  points  of  weakness, 
T>r  if  the  same  was  ill-adapted  to  American  conditions,  the  sooner 
it  was  found  out  the  better.  Certainly,  nothing  would  have  been 
more  disastrous  to  the  cause  of  genuine  life  insurance  for  working 
people  than  the  failure  of  Industrial  insurance,  once  the  system  had 
assumed  vast  proportions.  From  the  standpoint  of  public  policy, 
as  well  as  from  the  standpoint  of  the  individual  policy-holder,  it 
was  of  the  utmost  importance  that  Industrial  insurance  should  be 
subjected  to  every  test,  difficulty  and  trial,  so  that,  if  failure  was 
inevitable,  it  should  take  place  before  the  system  had  grown  into 
one  of  considerable  magnitude.  It  is  not  too  much  to  say  that 
no  form  of  life  insurance  or  other  financial  undertaking  has  ever 
experienced  more  difficulties  and  been  subjected  to  more  trials, 
testing  its  inherent  worth,  than  was  Industrial  insurance,  as 


102  HISTORY  OF  THE   PRUDENTIAL. 

practiced  by  the  Prudential  during  the  early  years  of  the  Com- 
pany's operations. 

As  the  business  of  the  Prudential  increased  from  year  to 
year,  more  and  more  intelligent  public  consideration  was  given  to 
the  subject,  and,  as  an  indication  of  the  public  recognition  of  the 
value  of  the  new  system  of  insurance,  I  can  not  do  better  than 
quote  the  following  extract  from  a  long  article  in  the  Insurance 
World  of  April,  1878,  as  an  illustration  of  the  conception  and 
appreciation  of  the  subject  at  this  period  :— 

We  think  that  this  system  of  insurance  among  the  poor  if  worked  up, 
would  become  as  popular  here  as  in  England  ;  some  of  our  leading  compa- 
nies should  set  aside  a  good  sum  for  the  purpose  of  testing  it.  The  agents 
now  in  the  field  could  have  it  under  their  care,  appointing  the  collectors  in 
every  workshop,  street  or  village,  whose  business  would  be  to  take  risks, 
collect  moneys  every  week  or  two  weeks,  and  pay  it  over  to  the  agent. 
The  small  sums  insured,  payments  made,  and  the  absence  of  bother,  would 
soon  recommend  it;  the  poor  would  take  hold  of  life  insurance  as  they  have 
not  yet  done,  and  millions  of  insurance  would  be  the  result. 

The  principal  value  of  the  article  is  to  be  found  in  the 
earnest  plea  for  insurance  for  small  amounts  and  premiums  pay- 
able on  the  weekly  plan,  and,  as  the  Insurance  World  well  said, 
that  ' '  If  this  plan  were  once  placed  before  the  public,  millions  of 
insurance  would  be  the  result. ' ' 

While  the  Prudential  had  been  successful  in  introducing 
genuine  Industrial  insurance  on  the  plan  of  the  British  Prudential 
to  the  working  population  of  the  large  manufacturing  cities  of 
New  Jersey,  other  companies,  like  the  John  Hancock  Life  Insur- 
ance Company  of  Boston,  had  failed  to  make  a  success  of  the 
plan  of  monthly-payment  insurance ;  while  the  Metropolitan 
had  made  but  a  very  limited  success  of  its  ' '  Bund  "  or  ' '  Union  ' ' 
arrangement  with  various  organizations  attempting  to  transact  an 
insurance  business  on  the  weekly-payment  plan.  In  reference  to 
the  Bund  plan  of  the  Metropolitan,  the  position  of  the  company 
was  well  stated  in  an  article  in  the  Spectator  for  May,  1878,  from 
which  I  quote  as  follows  : — 

The  Metropolitan  has  met  with  better  success  in  doing  so-called  indus- 
trial insurance  than  any  other  company  in  the  United  States.  It  has  done 
this  through  the  agency  of  a  powerful  social  organization  of  Germans — an 
aid  which  no  other  company  has  been  able  to  secure  for  such  a  purpose. 
In  this  work  the  company  has  undoubtedly  extended  the  benefits  of  life 
insurance  among  a  worthy  class  of  people,  where,  without  this  or  some 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  iyj-C).      103 

similar  agency,  but  little  life  insurance  business  could  be  done.  Small 
shopkeepers,  mechanics  with  small  incomes,  laborers  and  others  who 
would  not  ordinarily  be  induced  to  look  enough  at  the  subject  to  apprehend 
the  benefits  of  life  insurance,  or  to  believe  that  its  benefits  were  within 
their  reach,  have  been  approached  by  means  of  this  organization — which 
confers  substantial  benefits  upon  its  members  aside  from  the  life  insurance 
privileges  extended  to  them — and  have  been  persuaded  to  protect  their 
families  by  such  an  amount  of  life  insurance  as  they  could  pay  for  without 
serious  inconvenience. 

The  Spectator  properly  speaks  of  this  form  of  insurance  as 
"  so-called  "  Industrial  insurance,  for  an  attempt  to  transact  life- 
insurance  business  on  the  weekly-payment  plan  does  not,  as  such, 
represent  Industrial  insurance  as  it  is  understood  by  those  who 
manage  the  business  at  the  present  time.  As  has  been  pre- 
viously pointed  out,  an  effort  to  transact  an  insurance  business  on 
the  weekly-payment  plan  had  been  made  as  early  as  1847,  by  the 
Mutual  Benefit  of  Newark,  and  in  1868  by  the  American  Popular 
Life  and  other  companies  ;  but  these  efforts  failed,  in  that  no 
provision  had  been  made  for  the  collection  of  the  premiums,  the 
insurance  of  persons  at  all  ages,  and  the  adjustment  of  amounts 
of  insurance  to  the  premiums  as  a  unit,  instead  of,  as  is  the  prac- 
tice in  Ordinary  insurance,  the  adjustment  of  the  premium  to  the 
amount. 

While  writers  on  the  subject  of  life  insurance  for  the  masses 
recognized  more  or  less  the  great  value  and  success  of  the  British 
Prudential  in  developing  in  England  its  system  of  Industrial 
insurance,  there  were  many  who  were  skeptical  as  to  the  question 
whether  the  system  would  ultimately  prove  successful  in  the 
United  States.  Among  others,  the  Spectator,  then,  as  now,  one 
of  the  leading  insurance  publications  in  this  country,  in  an  article 
on  the  success  of  the  British  Prudential,  expressed  the  belief  that 
the  British  form  of  workingmeii's  insurance  was  not  likely  to 
prove  successful  among  the  people  of  this  country,  for,  it  was 
argued,  they  would  not  insure  for  small  sums,  nor  would  they 
be  willing  to  pay  premiums  in  weekly  instalments,  as  is  the 
practice,  and  one  of  the  essential  principles  of  workingmen's 
insurance  on  the  Industrial  plan.  I  can  not  do  better  than  quote 
briefly  from  the  article  in  the  Spectator  for  May,  1878,  as  follows  : — 

It  is  not  surprising  that  the  report  recently  made  by  the  Prudential 
Assurance  Company  of  London  has  attracted  a  great  deal  of  attention  and 


IO4  HISTORY  OF  THE   PRUDENTIAL. 

elicited  extended  comment  in  the  United  States.  The  report  shows  that 
the  company  has  met  with  very  great  success  in  what  it  calls  its  Industrial 
Branch,  and  certainly  success  in  this  branch  of  its  business  means  valuable 
service  rendered  to  a  large  and  needy  class  of  people,  who  if  they  did  not 
make  this  or  some  similar  provision  would  leave  their  families  in  poverty 
and  generally  in  pauperism.  No  words  can  exaggerate  the  value  of  the 
work  this  company  is  doing  among  the  laboring  people.  It  promotes  tem- 
perance, frugality,  thrift  and  all  the  kindred  mortal  virtues,  and  saves  tens 
of  thousands  from  a  life  of  pauperism  and  crime,  and  from  a  pauper's  or 
felon's  death. 

But  those  who  look  upon  the  success  of  this  company  as  something  which 
can  be  equalled  or  even  imitated  in  the  United  States  ignore  some  patent 
facts.  And  any  company  which  undertakes  that  class  of  business  in  the 
United  States  expecting  to  meet  with  success  comparable  with  this  will  cer- 
tainly be  disappointed.  The  failure  of  the  efforts  which  have  hitherto  been 
made  in  this  country,  in  the  direction  of  so-called  Industrial  Insurance,  is 
not  attributable  to  a  want  of  intelligence  as  to  methods  nor  to  a  want  of 
persistence  on  the  part  of  officers  and  agents  (albeit  these  defects  have 
characterized  the  efforts),  but  to  the  fact  that  such  insurance  is  not  adapted 
to  the  population  of  the  country. 

And  this  naturally  leads  to  the  consideration  of  a  field  which  life 
insurance  in  the  United  States  has  not  hitherto  cultivated  as  much  as  it 
ought  to  do,  and  in  which  good  results  may  be  produced.  Pretty  much  all 
the  efforts  of  companies  and  agents  have  been  made  among  those  who 
could  afford  or  could  be  induced  to  take  policies  for  large  sums.  Many 
solicitors  regard  time  spent  in  talking  about  a  policy  for  less  than 
$10,000  as  time  wasted  ;  and  $5,000  has  been  the  minimum  sum  worth 
any  consideration  at  their  hands.  Of  course,  the  temptation  to  seek 
those  and  only  those  who  can  afford  to  pay  several  hundred  dollars 
per  annum  for  life  insurance  is  strong,  and  the  ambition  to  get  ap- 
plications for  large  policies  is  a  worthy  one,  but  companies  and  agents 
must  thereafter  look  for  the  most  of  their  business  among  another  class 
of  people,  as  well  as  among  the  same  class  with  reduced  incomes  and 
modified  estimates  of  their  ability  to  pay  and  of  the  requirements  of  their 
families. 

There  are  in  this  country  many  thousands  who  need  life  insurance  and 
who  can  afford  small  policies — say,  from  $1,000  to  $2,500 — who  have  never 
been  solicited  by  competent  men.  The  solicitors  who  have  been  sent  to 
these  persons  have  been  beginners  in  the  work  who  had  not  learned  how  to 
present  the  advantages  of  life  insurance  or  the  merits  of  the  company  they 
represented ;  or  those  who,  though  not  beginners,  were  incompetent  from 
lack  of  intelligence  or  lack  of  industry,  and  the  result  has  of  course  been 
failure.  If  a  competent  solicitor,  one  who  has  hitherto  been  able  to  take 
applications  for  large  policies,  would  go  among  these  people  and  work 
with  as  much  persistence  and  enthusiasm  as  he  has  customarily  employed, 
and  with  entire  frankness,  he  would  find  the  result  profitable  to  himself  and 
any  really  good  company  he  chose  to  represent. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  1877-'*  79.       105 

On  careful  examination  of  this  article  an  experienced  life 
underwriter  will  at  once  notice  that  the  plea  of  the  Spectator  for 
an  extension  of  the  principles  of  life  insurance  to  mechanics  and 
others  for  policies  of  from  $1,000  to  $2,500  was  really  a  plea  for 
what,  in  course  of  time,  became  known  as  "special  adult 
business  "  or  "  Intermediate  insurance,"  as  transacted  to-day  by 
Industrial  companies  in  all  parts  of  the  country.  This  form  of 
insurance  could  not  be  written  on  any  considerable  scale  until  the 
vast  population  unacquainted  with  insurance  principles  had  been 
educated  by  slow  degrees,  first,  in  the  habit  of  systematic  saving  ; 
second,  in  a  true  appreciation  of  the  beneficence  of  legitimate  life 
insurance,  even  in  small  amounts  as  they  are  returned  to  policy- 
holders  by  the  methods  of  the  weekly-payment  plan.  Life  insur- 
ance as  practiced  by  the  Ordinary  life  companies  during  the 
later  seventies  and  early  eighties  was  really  class  insurance,  open 
only  to  men  of  considerable  income  and  means.  Industrial  insur- 
ance, however,  did  appeal  to  the  industrial  population  to  an  extent 
no  doubt  surprising  to  those  who  did  not  consider  the  system 
applicable  to  the  United  States.  And  nowhere,  perhaps,  was  this 
tendency  more  clearly  recognized  than  in  a  later  number  of  the 
Spectator \  published  during  August,  1878,  and  in  which  the  truth 
was  stated,  that  "life  insurance  is  about  descending  from  a 
wholesale  to  a  retail  business. ' '  The  early  error  on  the  part  of  the 
Spectator  is  easily  explained  by  the  paucity  of  general  information 
on  the  subject  at  the  time,  and  the  unostentatious  manner  in 
which  the  problem  of  Industrial  insurance  was  actually  being 
solved  in  Newark,  less  than  ten  miles  distant  from  New  York. 
In  justice  to  the  Spectator  it  must  be  said  that  it  was  not  the 
only  insurance  journal  which,  at  a  critical  moment,  seemed  rather 
to  oppose  the  development  of  Industrial  insurance  in  the  United 
States ;  for,  as  a  matter  of  fact,  even  the  Monitor,  which  had 
at  various  times  done  much  to  call  public  attention  to  the  prin- 
ciples and  practice  of  Industrial  insurance,  made  unfavorable 
reference  to  the  same  in  its  November  issue  in  1878.  In  the 
words  of  the  Monitor,  ' '  the  facts  leave  it  more  than  ever  open  to 
doubt  whether  Industrial  insurance  can  be  successfully  carried  on 
according  to  the  Ordinary  methods  of  life  insurance,"  and,  rather 
than  approving  of  the  British  plan  of  dealing  directly  with  the 
policy-holders,  the  Monitor  expressed  the  opinion  that  '  *  The 
company,  to  be  economical,  can  not  deal  directly  with  individuals. 


106  HISTORY   OF  THE   PRUDENTIAL. 

It  must  work  through  and  deal  with  subordinate  organizations, 
which  shall  themselves  furnish  the  membership,  and  relieve  this 
great  item  of  cost.  If  this  be  true,  Industrial  insurance  can  only 
be  successfully  worked  through  the  '  Bund  '  system,  such  as  has 
been  adopted  by  some  of  the  American  companies. ' ' 

Fortunately,  this  advice  on  the  part  of  the  Monitor  was  not 
heeded,  for  at  the  very  time  one  of  the  leading  organizations,  a 
well-known  German  insurance  and  relief  society,  with  nearly 
7,000  members  in  different  cities,  was  rumored  to  be  in  difficulties, 
and  it  was  not  long  afterwards  when  the  concern  went  out  of 
existence,  its  obligations  being  assumed  by  a  regular  Ordinary 
life  company. 

However  discouraging  such  remarks  as  the  preceding  must 
have  been  to  Mr.  Dry  den  and  his  associates,  the  progress  of  the 
Prudential  was  never  for  a  moment  seriously  hindered,  though 
the  difficulties  and  discouragements  would  easily  have  brought 
institutions  resting  on  a  less  substantial  basis  to  an  early  end. 

At  a  time  when  Industrial  insurance  was  being  actively 
placed  before  the  public,  practically  every  other  form  of  insurance 
for  workingmen  had  either  been  tried  or  was  now  being  put  for- 
ward, either  on  the  plain  basis  of  a  business  undertaking  in  the 
name  of  assessment  insurance,  or  on  the  semi -business  basis  of 
so-called  fraternal-insurance  organizations.  A  writer  on  the 
subject,  who  seems  to  have  given  considerable  attention  to  this 
side  of  the  question,  stated  that  there  were  then  in  the  United 
States,  approximately,  200,000  persons  insured  in  Masonic  Orders, 
Odd  Fellows'  Associations,  or  other  forms  of  fraternal  insurance. 

One  of  the  more  prominent  and  important  of  these  fraternal 
associations  was  The  United  Brethren  Mutual  Aid  Association  of 
Lebanon,  Pa.,  which  by  1878  had  reached  a  membership  of  some 
13,000.  After  an  existence  of  twenty-seven  years  the  society 
failed  in  1896  in  consequence  of  inherent  defects  which  must 
sooner  or  later  prove  the  downfall  of  all  similar  institutions.  The 
pathetic  side  of  such  failures  has  seldom  been  better  brought  out 
than  in  the  following  letter  from  Salem,  Oregon,  published  in 
one  of  the  insurance  journals  during  1896  :— 

When  I  was  a  )^oung  man  I  was  induced  to  join  the  United  Brethren 
Mutual  Aid  Society,  which,  at  that  time,  was  considered  the  strongest 
fraternal  order  in  existence.  I  have  faithfully  paid  my  assessments  for 
nearly  a  quarter  of  a  century,  and  now  in  my  old  age,  when  I  most  need 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  1877-79.       107 

insurance  and  am  unable  to  get  it  in  a  regular  life  insurance  company,  I  find 
myself  left  without  any  insurance  whatever — because  this  order,  that  I 
placed  my  reliance  in,  went  into  the  hands  of  a  receiver  March  17,  1896. 
**##/£  seems  almost  like  a  criminal  act  to  induce  people  to  place 

their  faith  in  institutions  of  this  kind. 

p.  C.  HETZWJR. 

If  Industrial  insurance  had  served  no  other  purpose  it  would 
have  full  justification  for  its  development  in  offering  a  safe  and 
substantial  substitute  for  these  so-called  co-operative  or  fraternal 
insurance  associations. 


io8 


HISTORY   OF  THE   PRUDENTIAL. 


CHAPTER  VIII. 

THE   PRUDENTIAL   INSURANCE   COMPANY   OF   AMERICA, 


After  a  period  of  three  years  and  two  months  of  actual 
business  operations,  The  Prudential,  on  January  i,  1879,  was  still 
the  only  company  transacting  Industrial  insurance  in  the  United 
States,  and,  while  satisfactory  progress  had  been  made,  no  other 
company  had  attempted  to  adopt  the  plan  of  The  Prudential. 
The  number  of  policies  in  force,  which  had  been  1  1,226  on  Decem- 
ber 31,  1877,  had  increased  to  22,808  policies  by  the  end  of  1878. 
The  insurance  in  force  had  been  more  than  doubled  during  the 
year,  and  that,  too,  in  spite  of  the  fact  that  the  business  operations 
of  the  Company  were  confined  to  the  State  of  New  Jersey. 

The  business  being  now  restricted  to  the  insurance  of  sums 
payable  at  death,  more  publicity  was  given  to  the  premium  rates, 
and  the  following  are  abbreviated  copies  of  the  tables  in  use  at 

this  time  :  — 

INFANTILE  RATE  TABLE. 

TABLE  OF  BENEFITS  PAYABLE  FOR  A  3-CENT  WEEKLY  PREMIUM. 
No  HIGHER  PREMIUM  CAN  BE  TAKEN. 

(First  used  April  2,  1877.) 


AGE  LAST  BIRTHDAY. 

AFTER  THREE  MONTHS. 

AFTER  ONE  YEAR. 

I 

$10  00 

$11  00 

a 

II  00 

12  00 

3 

12  00 

13  00 

4 

13  °° 

14  oo 

5 

14  oo 

15  oo 

6 

15  oo 

18  oo 

I 

18  oo 

21  00 

22  OO 

28  oo 

9 

25  oo 

35  oo 

10 

33  °° 

46  oo 

ii 

45  oo 

60  oo 

12 

60  oo 

If  the  child  dies  within  three  months  from  the  date  of  the  contract,  no 
insurance  will  be  payable. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA, 


1  09 


It  will  be  noted  that  under  this  table  the  Company  limited 
the  premium  on  policies  for  persons  under  the  age  of  thirteen  to 
three  cents,  while  no  benefit  was  payable  until  the  child  had  been 
three  months  insured.  This  practice  during  the  early  years  of 
Industrial  insurance  is  another  indication  of  the  conservative  and 
cautious  spirit  which  has  been  such  a  marked  characteristic  of 
the  managers  of  The  Prudential  Insurance  Company  of  America. 

ADULT  RATE  TABLE. 
THE;  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA.     1879. 

WEEKLY  PREMIUMS. 


AGE. 

FIVE  CENTS. 

TEN  CENTS. 

TWENTY-FIVB 
CENTS. 

FIFTY  CENTS. 

*3 

$H7  75 

15 

114  oo 

20 

103  oo 

$206  oo 

25 

90  50 

181  oo 

$452  50 

30 

79  oo 

158  oo 

395  oo 

35 

67  75 

135  50 

338  75 

40 

56  75 

"3  50 

283  75 

45 

45  50 

91  oo 

227  50 

$455  oo 

50 

37  oo 

74  oo 

185  oo 

370  oo 

29  75 

59  50 

148  75 

297  50 

60 

23  25 

46  50 

116  25 

232  50 

65 

17  oo 

34  oo 

85  oo 

170  oo 

70 

12  50 

25  oo 

62  50 

125  oo 

75 

9  50 

19  oo 

47  50 

95  oo 

How  carefully  these  tables  had  been  calculated  is  illustrated 
by  the  fact  that  to-day,  after  twenty  years,  the  rates  are  practi- 
cally the  same,  while  the  benefits  have  been  increased  in  the 
direction  of  more  liberal  concessions,  with  special  reference  to 
paid-up  policies,  cash-surrender  values,  etc.  The  only  material 
changes  or  increases  in  the  amounts  of  benefits  which  have  been 
made  are  to  be  found  under  the  infantile  table,  where  larger 
amounts  are  now  paid  for  the  same  unit  of  premium.  This  is  due 
largely  to  the  increased  duration  of  infantile  life,  or,  conversely, 
to  the  diminished  mortality  of  children  under  ten  years  of  age 
which  has  taken  place  during  the  past  twenty  years. 

That  the  difficulties,  disadvantages  and  even  dangers  of  the 
new  experiment  in  life  insurance  were  fully  realized  by  outsiders 
is  incidentally  made  clear  by  some  remarks  addressed  to  the  oifi- 
cers  of  the  Company,  and  especially  to  Mr.  Dry  den,  at  a  banquet 


IIO  HISTORY   OF  THE   PRUDENTIAL. 

and  annual  reunion  of  the  officers  and  agents  of  The  Prudential 
in  January,  1879  ;  and  it  may  not  be  out  of  place  to  give  space 
to  a  brief  abstract  of  the  remarks  of  Dr.  Burnett,  who  spoke  as 
follows  : — 

In  conclusion,  gentlemen  directors,  allow  me  to  give  my  most  agree- 
able testimony  to  the  thorough  work  done  in  this  office.  The  Prudential 
Insurance  Company  of  America  is  skillfully  managed  on  an  efficient  busi- 
ness basis.  Its  financial  affairs  are  transacted  with  rigid  economy,  united, 
when  the  interest  of  the  Company  demands  it,  with  a  most  liberal  tact. 
There  is  nothing  niggardly  here,  although  every  item  of  expense  is  sub- 
jected to  the  closest  scrutiny.  Gentlemen,  your  work  is  well  done.  *  *  * 
Never  was  a  "  Captain  "  more  ably  supported  by  a  lieutenant  than  is  our 
President  by  our  most  efficient  Secretary.  As  long  ago  as  June  9, 1873,  when 
I  had  the  pleasure  of  examining  the  Hon.  John  Whitehead,  the  first  appli- 
cant for  a  policy  in  The  Widows'  and  Orphans'  Friendly  Society,  out  of  which 
The  Prudential  arose,  he  being  the  President  of  the  Society  at  that  time, 
and  Mr.  John  F.  Dryden  was  the  second  applicant  for  $i ,000  in  the  same 
Society — our  Secretary  was  already  revolving  in  his  fertile  brain  the  idea  of 
The  Prudential  Company  in  America,  founded  on  the  same  principles  as 
the  great  Prudential  of  London.  He  often  conversed  with  me  upon  the 
subject,  and  prophesied  its  coming  formation  and  its  coming  success.  His 
whole  soul  appeared  to  be  bound  up  in  the  idea,  and  I  rejoice  that  the 
Company  has,  as  its  representative  in  this  capacity,  a  gentleman  of  rare 
executive  ability  with  a  life-love  for  his  work,  a  true  and  an  honest  man — 
God's  noblest  work. 

This  view  of  the  success  of  The  Prudential,  increasing  public 
appreciation  of  this  form  of  insurance,  the  officially  attested  facts 
indicating  the  progress  and  financial  solvency  of  the  Company, 
all  accessible  to  the  managers  of  other  insurance  institutions, 
made  it  clear  that  the  time  was  not  far  off  when  Industrial  insur- 
ance would  be  undertaken  on  a  larger  scale  and  by  other  com- 
panies with  an  ample  capital  and  an  established  agency  force 
likely  to  prove  of  material  aid  in  developing  new  territory. 

The  opportunity  for  new  Industrial  insurance  companies  was 
apparent  and  recognized  by  many  of  the  insurance  journals  of 
the  period.  Thus,  in  December,  1878,  the  Insurance  World  of 
Pittsburg,  Pa. ,  called  attention  to  the  fact  that  ' '  Industrial 
insurance,  notwithstanding  the  expense,  is  a  growing  necessity 
in  our  workshops  and  factories.  Some  of  our  large  companies 
might  reap  a  harvest  in  this  direction.  The  Travelers,  if  we 
might  make  the  suggestion,  is  a  company  well  adapted  to  take 
hold  of  this  work."  Thus,  by  December,  1878,  the  growing 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l879~'8o.      Ill 

necessity  for  Industrial  insurance  was  becoming  recognized  out- 
side of  the  city  of  Newark,  and  in  Boston  I  find  that  there  was 
in  existence,  in  1879,  The  St.  Peter's  Workingmen's  Benefit 
Club,  in  a  manner  a  typical  American  Friendly  Society,  with 
73  members,  in  which  dues  were  paid  weekly  at  a  rate  of  10  cents 
per  member,  for  insuring  $5  a  week  in  sickness,  $30  at  the  death 
of  a  member,  and  $15  at  the  death  of  a  member's  wife.  As  an 
indication  of  the  necessity  for  public  education  in  matters  of 
insurance  and  savings,  I  can  not  do  better  than  quote  the  remarks 
from  the  "  Massachusetts  Labor  Report  for  1879,"  published  in 
1880,  in  which  it  was  stated  that  "the  great  multitude  of  our 
workingmen,  for  whom  almost  nothing  is  done  except  by  way  of 
relief  when  they  fall  into  distress,"  represent  "  the  field  to-day  for 
the  best  work." 

Official  reference  is  made  to  the  subject  in  the  annual  report  of 
the  Massachusetts  Insurance  Department  for  this  year,  in  which 
occurs  the  statement  that ' '  the  people  are  not  satisfied  with  present 
developments  or  conditions, ' '  and  facts  seem  conclusively  to  prove 
the  increasing  popularity  of  what  are  termed  "  Prudential,"  "  In- 
dustrial," "  Mutual  Benefit,"  "  Mutual  Relief,"  "  Co-operative," 
and  other  plans  of  insurance,  some  of  the  latter  having  no  scien- 
tific basis  or  financial  stability. 

Manifestly,  the  question  of  Industrial  insurance  was  now  act- 
ively before  the  public,  and  neither  Insurance  Commissioners  nor 
the  insurance  press  missed  an  opportunity  to  make  reference  to 
the  increasing  need  for  this  form  of  insurance  in  all  parts  of  the 
country.  In  the  Insurance  Times  for  April,  1879,  I  find  a  lengthy 
article  on  the  subject,  from  which  I  make  a  brief  quotation  : — 

There  may  be  an  attraction  in  placing  policies  for  large  amounts  on 
the  lives  of  persons  who  are  likely  to  be  prompt  in  the  payment  of 
premiums  at  considerable  intervals.  But  if  life  insurance  be  a  system 
benevolent  in  its  spirit  and  beneficent  in  its  workings,  the  prime  object 
should  be  the  diffusion  of  its  blessings  among  the  masses — the  good  of  the 
greatest  number,  not  the  great  good  of  the  few.  No  consideration  of 
present  trouble  and  vexation  should  stand  in  the  way.  Will  it  pay  ?  is  the 
only  practical  and  proper  question  as  to  any  class  or  condition  of  life.  Just 
as  low  in  the  scale  of  society  as  the  effort  can  be  made  self -sustaining ,  should 
the  insurance  manager  be  willing  to  go. 

The  last  remark  is  especially  significant.  As  I  have  pre- 
viously stated,  Industrial  insurance  companies  have  never  made 


V 

' 


112  HISTORY  OF  THE   PRUDENTIAL. 

it  their  business  to  go  low  down  in  the  scale  of  human  beings 
for  the  purpose  of  placing  their  policies.  This  would  not  be 
desirable  from  a  business  standpoint  as  regards  a  profitable  prog- 
ress, since  the  high  mortality  prevailing  among  the  lowest  poor 
is  in  itself  a  sufficient  discouragement  to  their  insurance ;  but  a 
still  more  serious  disadvantage  in  transacting  business  among 
paupers,  or  the  lowest  poor,  is  that  the  requirements  of  the 
business  for  the  continuance  of  the  policies  are  not  such  as  to 
make  it  possible  to  transact  business  among  them  on  a  profitable 
basis.  It  can  not  be  too  often  pointed  out  that  a  distinction 
should  be  drawn  between  paupers  and  the  poor  or  lowly,  who 
still  in  their  deepest  poverty  maintain  a  determined  struggle  for 
existence  upwards  and  onwards  towards  a  higher  and  a  better  life. 
It  is  something  very  considerably  to  the  credit  of  the  industrial 
population,  or  that  large  portion  which  work  for  small  and  often 
uncertain  wages,  that  they  have,  nevertheless,  within  the  limit 
of  their  means,  if  but  for  a  single  five-cent  premium,  made  a 
provision  on  their  own  account  against  life's  contingencies,  and, 
as  it  has  been  so  eloquently  said  by  Mr.  Dry  den,  "  against  a  fate 
worse  than  death." 

For  some  curious  reason  the  Insurance  Times  seems  to  have 
known  very  little  of  the  progress  of  The  Prudential  even  as  late 
as  April,  1879,  for  in  a  lengthy  article  on  the  subject,  in  which 
once  more  the  value  and  importance  of  the  system  is  pointed 
out,  the  editor  concludes  that  ' '  The  time  is  ripe  for  this 
great  and  beneficent  undertaking.  Some  one  will  soon  step  for- 
ward to  secure  the  profit,  if  not  the  laurel.  The  movement 
ought  to  be  controlled  by  the  large  life  insurance  companies, 
whose  abundant  means,  previous  success  and  matured  system 
would  inspire  confidence.  They  have  the  facilities  for  organizing 
a  new  clerical  force,  and  for  managing  the  details  of  the  business 
in  an  economical  way.  Which  of  them  will  be  the  pioneer  in 
America  ?  The  company  first  in  the  field  is  sure  of  a  great  and 
profitable  success.  The  moment  it  announces  its  intentions  it 
will  receive  a  God-speed  from  the  newspaper  and  press  generally, 
and  from  every  true  philanthropist. ' ' 

To  these  words  of  just  appreciation  of  the  necessity  for 
Industrial  insurance  for  the  industrial  population,  the  Insurance 
Times  of  April,  1879,  adds  some  further  comments,  as  to  the 
probable  results  of  the  introduction  of  this  form  of  insurance 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l879~'8o.      113 

into  the   United   States,    which   subsequent    events  have   fully 

justified : — 

/O   */v 
Now  the   industrial  insurance  will  seize  on  this  circumstance  in  the 

lives  of  the  lowly.  It  will  become  a  tie  to  bind  a  man  to  his  family.  He 
will  not  only  feel  that  he  is  doing  something  beyond  what  the  law  will  com- 
pel him  to  do,  but  he  will  be  reminded  month  after  month,  or  week  after 
week,  as  the  insurance  man  appears,  that  he  is  bound  by  a  tie  that  will 
require  more  than  ordinary  selfishness  to  break.  It  is  a  silken  tie,  but  one 
that  may  last  for  life.  Nay  !  It  may  be  strong  even  when  he  sleeps  in 
death.  For  he  is  rearing  a  monument  of  esteem  and  affection  in  the  heart 
of  his  family  that  may  have  more  real  grandeur  than  a  cenotaph  of  marble. 

What  will  be  the  effect  of  this  increase  of  family  affection  ?  Unques- 
tionably higher  morals.  There  will  be  an  additional  motive  to  lead  a  good 
life.  Home  will  become  attractive.  The  tavern  and  bar-room  will  lose 
their  attractions.  The  society  of  the  family  will  be  preferred  to  the  society 
of  the  vicious.  Those  that  have  failed  will  be  reclaimed.  Those  that  are 
tempted  may  be  confirmed  in  good  purpose. 

This  improvement  in  the  social  relations  may  cause,  or  it  may  be  caused 
by  another  benefit  of  industrial  insurance.  The  man  will  become  more 
regular  in  his  business  habits,  in  the  employment  of  his  time.  It  will  not 
require  the  mathematics  of  the  actuary  to  demonstrate  that  the  parties 
assured  will,  on  the  average,  earn  more  difference  in  money  than  the 
amount  of  their  premiums.  The  regularity  of  the  instalment  payments 
will  tend  to  make  men  more  methodical.  What  makes  them  more  method- 
ical will  improve  their  finances.  The  removal  of  anxious  feeling  as  to 
the  future  welfare  of  their  families  will  tend  to  make  them  more  efficient. 
And  they  will  not  only  earn  more,  but  they  will  spend  less  on  things  of  no 
account.  Great  philanthropists  have  often  said  that  they  had  none  the 
less  money  for  their  benevolence.  Their  habits  of  life  are  more  productive. 
"Giving  doth  not  impoverish."  "There  is  he  that  scattereth  and  yet 
increaseth."  Industrial  insurance  will,  in  a  thousand  ways,  and  by  a 
thousand  circumstances,  acting  and  re-acting  on  each  other,  promote  at 
the  same  moment  the  moral  welfare  of  the  assured  and  improve  their 
pecuniary  condition.  The  network  of  social  relations,  and  of  the  various 
influences  that  affect  individual  mind  and  action,  are  so  interwoven  that 
the  whole  system  grows  and  expands  imperceptibly  and  inscrutably. 
"Touching  one  must  strike  the  other,  too." 

With  the  improvement  in  morals  and  in  material  interests  will  come 
the  elevation  of  the  man  as  a  member  of  the  body  politic.  He  will  not 
only  be  lifted  higher  in  the  scale  of  society,  but  in  many  cases  the  mere 
consumer  will  be  converted  into  a  producer.  It  would  require  no  fertile 
pen  to  picture  the  public  benefits  of  industrial  insurance.  The  decrease 
of  crime,  the  stoppage  to  a  great  extent  of  the  drain  necessary  to  provide 
the  benevolent  institutions  required  by  destitution  and  infirmity,  the 
saving  to  the  State  in  the  cost  of  maintaining  its  criminal  jurisdiction  and 
supporting  its  reformatory  and  penal  establishments,  the  addition  to  its 
tax-paying  population,  the  improvement  of  the  public  health,  and  the 


114  HISTORY  OK  THE   PRUDENTIAL. 

increase  of  longevity,  are  only  some  of  the  public  benefits  that  will  grow 
out  of  this  beneficent  system. 

These  just  and  prophetic  utterances  were  made  by  a  writer 
familiar  with  the  results  which  Industrial  insurance  had  already 
achieved  in  England  ;  and  it  is  not  too  much  to  say  that  seldom 
has  prophecy  been  more  fully  realized  than  in  the  case  of  Indus- 
trial insurance — to-day,  from  the  workingrnan's  standpoint,  at 
least,  the  most  satisfactory  method  of  providing  for  the  contin- 
gencies of  life,  and  of  securing  widows  and  orphans  against 
pauperism  and  want  in  many  forms. 

The  article  from  which  I  have  quoted  at  length  was  no 
doubt  largely  instrumental  in  calling  the  attention  of  insurance 
companies  to  the  increasing  importance  of  Industrial  insurance, 
and,  in  fact,  the  same  number  of  the  Insurance  Times*  contains 
a  reference  to  the  fact  that  several  New  York  life-insurance 
companies  were  contemplating  the  adoption  of  the  plan  of 
Industrial  insurance,  while  one,  the  Provident  Savings  Life  As- 
surance Society,  had  actually  organized  an  Industrial  insurance 
department,  under  the  supervision  of  an  Knglish  gentleman 
familiar  with  the  methods  of  the  British  Prudential.  The  Provi- 
dent Savings  was,  therefore,  the  first  of  a  number  of  regular 
Ordinary  companies  to  follow  the  lead  of  The  Prudential  in  trans- 
acting an  Industrial  business  on  the  plan  of  the  British  Prudential. 
The  Provident  Savings,  however,  failed  to  recognize  all  of  the 
essential  principles,  and  seems  never  to  have  entered  seriously  and 
energetically  upon  the  transaction  of  this  form  of  insurance.  The 
company  never  attempted  to  push  this  class  of  business  even  in 
the  very  beginning,  and  after  a  few  years  the  Industrial  branch 
was  discontinued. 

Closely  following  the  organization  of  an  Industrial  depart- 
ment on  the  part  of  the  Provident  Savings,  came  an  attempt  on 
the  part  of  some  of  the  officers  of  the  New  York  Life,  who 
had  associated  with  themselves  Mr.  Bassett,  the  first  President 
of  The  Prudential  Friendly  Society,  for  the  purpose  of  organiz- 
ing the  Industrial  Insurance  Company  of  the  United  States. 
The  new  company  proposed  to  issue  policies  from  ages  one  to 
seventy-five,  and  furnish  insurance  in  sums  ranging  from  $50  to 

*  Insurance  Times,  April,  1879,  p.  232. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l879~'8o.      115 

$500  to  the  poorer  classes,  receiving  the  premiums  in  weekly 
or  monthly  instalments.  The  payments  were  to  range  from 
three  cents  to  fifty  cents  a  week,  but,  for  reasons  which  can  not 
now  be  ascertained,  the  company  did  not  assume  a  corporate 
existence,  although  an  effort  seems  to  have  been  made  to  organ- 
ize the  same  on  a  substantial  basis.  Both  Mr.  Beers  and  Mr. 
Franklin,  as  officers  of  the  New  York  Life,  were  among  the 
incorporators,  but  it  would  appear  that  the  effort  was  only  a  half- 
hearted one,  probably  due  more  to  Mr.  Bassett's  influence  than 
to  a  strong  inclination  on  the  part  of  the  officers  of  the  New 
York  lyife.  In  making  reference  to  this  effort  to  organize  a  new 
Industrial  company,  the  Spectator,  in  its  October  issue  of  1879, 
referred  to  The  Prudential  and  the  results  which  had  been  accom- 
plished as  follows  : — 

The  Prudential,  of  Newark,  has  been  extremely  successful  thus  far,  and 
we  have  no  doubt  but  the  application  of  the  same  principle  to  a  more 
extended  field  will  meet  with  equal  success.  It  is  but  justice  to  state,  in 
this  connection,  that  The  Prudential,  of  Newark,  is  largely  indebted  to  its 
Secretary,  John  F.  Dry  den,  for  the  success  which  it  has  realized.  His 
ability  and  indefatigable  industry  have  been  incessantly  devoted  to  the 
furtherance  of  this  system  of  insurance,  of  which  he  was  the  original 
promoter  in  this  country.  Having  been  so  successful  in  New  Jersey,  the 
Company  is  about  to  commence  business  in  New  York  State. 

Before  I  deal  with  the  extension  of  the  business  of  The 
Prudential  to  other  States  than  New  Jersey,  I  must  briefly 
notice  an  effort  to  establish  an  Industrial  insurance  company  in 
Massachusetts,  by  the  John  Hancock  Mutual  I4fe  Insurance  / 
Company  of  Boston,  which,  as  has  been  stated,  had  commenced 
the  issue  of  monthly  policies  on  what  it  called  The  Prudential 
plan,  as  far  back  as  January,  1878  ;  but  it  was  in  this  year, 
in  August,  1879,  that  it  commenced  the  issue  of  regular 
Industrial  policies  on  the  weekly -premium  payment  plan,  identi- 
cal in  most  respects  with  the  methods  and  practice  adopted  by 
The  Prudential  of  Newark,  after  the  model  of  the  Prudential  of 
England.  This  effort  on  the  part  of  the  John  Hancock  proved  a 
success,  and  the  company  is  to-day  the  third  largest  Industrial 
insurance  company  in  this  country. 

At  the  same  time  that  the  Provident  Savings  and  the  John 
Hancock  were  making  efforts  to  extend  Industrial  insurance, 
another  large  company  had  had  the  question  under  consideration 


n6 


HISTORY  OF  THE  PRUDENTIAL. 


for  some  time,  and  seems  to  have  been  actively  engaged  in  the 
study  of  Industrial  insurance  in  England  through  its  president, 
who,  immediately  upon  his  return,  took  steps  to  organize  an 
Industrial  branch,  out  of  which  in  time  developed  the  largest 
Industrial  insurance  company  of  America, — The  Metropolitan 
Life  Insurance  Company  of  New  York. 

The  first  Industrial  policy  of  the  Metropolitan  was  issued  on 
the  1 7th  of  November,  1879,  or  just  four  years  after  The  Pruden- 
tial had  commenced  actual  business  operations, — on  the  loth  day 
of  the  same  month  in  1875.  Thus,  by  the  close  of  the  year  there 
were  four  companies  actively  engaged  in  the  business  of  Industrial 
insurance,  and  it  may  be  of  more  than  passing  interest  to  give 
the  results  accomplished,  as  shown  by  the  returns  of  the  business 
in  force  December  31,  1879  : — 

INDUSTRIAL  INSURANCE  IN  THE 
UNITED  STATES.     1879. 


No. 

AMOUNT. 

AVERAGE  POLICY. 

47  7ic 

$3.  866  012.  oo 

$88  00 

Provident  Savings,   
John  Hancock,  

i,947 

9  •227 

258,033  oo 
05  1  ooo  oo 

133  oo 

IO2    OO 

Metropolitan,     

c  142 

516  618  oo 

IOO   OO 

Total  

60,132 

$5,592,564  oo 

$93  oo 

This  table  shows  that  there  were  in  force  in  1879  in  The 
Prudential  43,715  policies,  while  the  four  companies  together 
had  over  60,000  policies  in  force.  While  only  four  companies 
are  included  in  the  above  table,  there  was  still  another, 
The  Germania  Life  Insurance  Company  of  New  York,  which 
also  during  the  month  of  November  *  had  commenced  the 
transaction  of  an  Industrial  business,  but  for  which  the  returns 
are  not  available  for  the  end  of  the  calendar  year,  1879. 

Thus  by  January  i,  1880,  five  companies  were  in  the  field, 
and  the  history  of  Industrial  insurance  thereafter  is  no  longer 
exclusively  the  history  of  The  Prudential  Insurance  Company. 


*  By  a  curious  coincidence  the  first  Industrial  policy  of  the  Germania 
was  also  issued  on  the  i7th  of  November,  1879. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  iyQ-o.      1 17 

The  object  of  Mr.  Dry  den's  efforts  had  been  accomplished : 
Industrial  insurance  had  been  proven  a  success,  the  business 
had  been  established  011  a  substantial  and  scientific  basis, 
and  all  the  companies  which  followed  The  Prudential  fol- 
lowed its  lead  in  placing  the  Industrial  business  on  a  sound 
financial  foundation,  and  for  this  reason  there  has  never  been 
a  single  failure  of  a  legitimate  Industrial  insurance  company 
in  the  United  States.  To  this  is  due  the  fact,  in  marked  con- 
trast to  the  history  of  the  thousands  of  attempts  at  pseudo- 
insurance  transacted  under  various  names,  that  not  a  single 
dollar  has  ever  been  lost  to  a  policy-holder  in  an  Industrial 
company  on  account  of  financial  insolvency,  or  the  shameful 
betrayal  of  a  sacred  trust. 

Near  the  close  of  the  year  1879  The  Prudential  had  taken 
steps  to  increase  its  capital  to  $100,000,  to  provide  the  necessary 
deposit  to  enter  the  State  of  New  York.  Men  of  exceptional 
ability  had  been  induced  to  enter  the  service  of  the  Company  and, 
among  others,  Mr.  John  F.  Collins,  who  had  been  the  Secretary 
of  the  Republic  L/ife  of  Chicago,  was  placed  in  charge  of  the 
Company's  business  in  Philadelphia,  while  Mr.  George  H. 
Thornton,  ex- President  of  the  John  Hancock  Mutual  Life, 
was  given  charge  of  the  office  of  the  Company  in  the  city  of 
New  York.  The  Philadelphia  Underwriter,  in  making  mention 
of  the  extension  of  the  operations  of  the  Company,  referred  to 
the  opening  of  an  office  in  Philadelphia,  stating  that  ' '  We  trust 
that  under  the  lead  of  the  efficient  gentlemen  and  their  coadju- 
tors, who  now  direct  the  affairs  of  the  Company,  its  career  may  be, 
over  a  large  extent  of  territory,  as  nobly  efficient  as  it  has  been 
in  Newark  and  vicinity. ' ' 

The  Insurance  Monitor,  in  November,  1879,  in  referring  to 
the  admission  of  The  Prudential  to  the  State  of  New  York, 
referred  to  the  Company  as  follows  : — 

The  Prudential  Life  Insurance  Company  of  New  Jersey  has  been 
admitted  to  the  State  of  New  York,  and  has  taken  offices  in  the  Astor 
House,  where  the  headquarters  of  the  company  will  henceforth  be.  This 
institution  has  been,  for  several  years,  quietly  at  work  in  New  Jersey,  and 
the  amount  of  business  which  it  has  placed  upon  its  books  is  something 
amazing.  It  is  the  first  practical  illustration  of  what  can  be  done  in 
prudential  life  insurance  that  has  yet  been  furnished  by  an  American 
institution,  and  we  shall  look  with  great  interest  for  its  future  develop- 
ment. 


Il8  HISTORY   OF  THE   PRUDENTIAL. 

Before  the  Company  had  been  admitted  to  the  State  of  New 
York  its  affairs  had  been  thoroughly  investigated  under  the 
direction  of  the  Secretary  of  the  State  of  New  Jersey,  by  so 
high  an  actuarial  authority  as  Mr.  David  Parks  Fackler.  I 
quote  from  the  Spectator  of  November,  1879,  a  brief  statement 
in  reference  to  this  examination  :— 

Recently  the  stockholders  of  the  company  paid  in  an  additional 
$100,000,  and  now  propose,  as  soon  as  the  details  are  arranged,  to  prosecute 
business  in  the  States  of  New  York  and  Pennsylvania.  The  sum  of  $100,000 
has  been  deposited  with  the  New  Jersey  State  Treasurer,  and,  at  the  request 
of  the  company,  its  affairs  have  been  thoroughly  investigated,  Secretary 
of  State  Kelsey  employing  D.  P.  Fackler,  the  well-known  insurance 
actuary,  to  value  its  liabilities  and  to  critically  examine  not  only  the 
assets  of  the  company,  but  its  methods  of  doing  business.  The  reports 
upon  both  heads  are  exceedingly  complimentary  to  the  management  of 
the  company.  The  Prudential  is  conducted  upon  precisely  the  same 
plan  as  the  Prudential  of  London,  one  of  the  largest  and  wealthiest  life 
companies  in  the  old  country.  Hundreds  of  instances  might  be  mentioned 
where  a  policy  in  The  Prudential  has  saved  the  insured  from  being  buried 
in  a  pauper's  grave  at  the  expense  of  the  public.  It  will  be  seen  that 
the  purposes  of  the  company  are  beneficent  in  the  highest  degree,  and  we 
have  no  doubt  but  it  will  meet  with  continued  success  in  its  enlarged 
sphere  of  usefulness. 

As  has  been  stated,  by  the  first  of  January,  1880,  The  Pru- 
dential had  43,715  policies  in  force,  for  a  sum  of  $5,866,913  of 
insurance  protection.  From  the  beginning  the  Company  had  acted 
upon  a  principle,  from  which  it  has  never  deviated  during  the 
course  of  more  than  a  quarter  of  a  century  of  Prudential  history, — 
and  I  can  not  do  better  than  quote  Mr.  Dry  den's  views  on  this 
point,  from  the  annual  letter  to  the  field  force,  dated  January  2, 
1900,  in  which  I  find  reiterated  what  had  so  often  been  expressed 
in  earlier  official  communications  :  ' '  By  word  and  pen  we  have 
made  it  known  that  The  Prudential  seeks  only  to  surpass  its  own 
record."  This  policy  of  conservatism  and  prudence  has  char- 
acterized the  development  of  the  Company  from  the  date  the  first 
policy  was  written,  on  November  10,  1875,  and  how  early  and 
fully  this  policy  was  appreciated  by  the  public  is  indicated  by  a 
statement  in  the  Insurance  World  of  1880  : — 

That  the  subject  of  industrial  insurance  has  been  so  much  neglected  in 
the  light  of  its  success  elsewhere,  is  a  source  of  considerable  surprise. 
However,  within  the  last  couple  of  years  the  subject  has  received  more 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l879~'8o.      119 

favorable  attention.  A  few  of  the  regular  life  companies  have  been  push- 
ing an  industrial  branch  with  a  reasonable  amount  of  success,  whilst  one 
company,  The  Prudential,  of  Newark,  has  been  making  a  specialty  of  this 
class  of  insurance,  and  by  not  endeavoring  to  do  too  much  at  once,  but  to 
cover  thoroughly  each  field  as  it  slowly  extends  its  operations,  bids  fair  in 
a  few  years  to  become  a  household  word  with  our  working  classes. 

This  prediction  on  the  part  of  the  Insurance  World  has 
been  more  than  fulfilled  during  the  later  years  of  Prudential 
history,  and  it  is  not  too  much  to  say,  without  vanity  or 
vainglorious  pride,  that  the  name  of  The  Prudential  and 
its  motto,  "The  Prudential  has  the  strength  of  Gibraltar," 
are  to-day  household  words  in  America  from  Maine  to  Cali- 
fornia. 

By  1880  the  subject  of  Industrial  insurance  had  attracted 
sufficient  attention  to  receive  special  consideration  in  the  annual 
report  of  the  Massachusetts  Insurance  Commissioner.  The  Com- 
missioner called  the  attention  of  the  Legislature  to  the  successful 
introduction  of  the  system  by  several  companies  authorized  to 
transact  business  in  Massachusetts,  stating  that  ' '  Though 
somewhat  experimental  in  its  present  stage  of  development  in 
this  country,  its  success  has  thus  far  exceeded  all  expectation. 
Being  especially  adapted  to  the  poor  and  laboring  classes,  its 
material  and  timely  relief,  so  promptly  furnished  in  seasons  of 
pressing  need,  is  proving  itself  a  welcome  boon  to  multitudes 
of  grateful  beneficiaries. ' '  However,  a  weak  point  was  referred 
to  by  the  Commissioner,  which,  though  fully  provided  for  by 
the  managers  of  The  Prudential,  seemed  to  require  legislative 
action.  In  the  words  of  the  Commissioner,  "The  present 
laws  of  the  State  fail  to  provide  a  proper  standard  of  reserve 
for  this  plan  of  insurance,  a  very  large  portion  of  its  policies 
not  coming  within  the  rules  of  valuation  applicable  to  other 
insurance."  With  this  end  in  view,  a  bill  to  regulate  the  busi- 
ness had  been  introduced  into  the  Legislature,  but  failed  of 
passage  ;  but,  as  far  as  The  Prudential  was  concerned,  it  had 
from  the  beginning  provided  an  adequate  reserve  for  all  its 
policies,  and  this  practice  has  been  rigorously  adhered  to  up 
to  the  present  time.  One  important  point  had  been  gained, 
however,  and  that  was  that  by  1880,  after  a  little  more  than  four 
years  of  actual  business  operations  on  the  part  of  The  Prudential, 
the  business  had  increased  sufficiently  in  extent  to  be  officially 


120  HISTORY  OF  THE   PRUDENTIAL. 

recognized  as  a  distinct  branch  of  legitimate  life-insurance  prac- 
tice. One  other  problem,  however,  had  attracted  the  attention 
of  the  Insurance  Commissioner,  as  a  serious  question  confronting 
the  Company,  and  that  was  the  valuation  of  policies  on  the  lives  of 
persons  under  ten  years  of  age.  In  a  special  report  on  the  subject, 
the  Deputy  Commissioner  of  Insurance  of  Massachusetts,  under 
date  of  August  30,  1880,  stated  that  "  In  attempting  to  apply  the 
provisions  of  the  general  insurance  laws  to  the  regulation  of  the 
business  of  Infant  Prudential  Insurance,*  we  are  met  at  the  outset 
with  the  fact  that  for  the  valuation  of  such  policies  no  standard 
is  either  fixed  or  provided  for,  and  therefore,  so  far  as  the  general 
law  is  concerned,  the  inference  might  be  that  this  form  of  policy 
is  not  recognized  as  a  life-insurance  contract,  but  the  charters  of 
the  companies  operating  this  plan  of  insurance  empower  them 
'  to  do  insurance  upon  lives '  without  reference  to  ages,  and  thus 
place  beyond  question  the  legitimacy  of  the  business. ' ' 

The  value  of  this  official  reference  to  Industrial  insurance 
lies  in  the  fact  that,  according  to  the  highest  authority  on  insur- 
ance interests,  the  insurance  of  persons  of  young  ages  was  fully 
as  legitimate  as  the  insurance  of  adults.  The  essential  point  in- 
volved was  that  the  so-called  infantile  policies  were  policies  on  per- 
sons under  the  age  of — say — thirteen,  and  no  reserve  was  required, 
since  the  mortality  at  the  younger  ages  diminishes  constantly 
from  age  o  until  ages  13  to  15  are  reached.  After  this  age  the 


*  The  term  "  Infant  Prudential  Insurance  "  is  a  misnomer  and  equally 
misleading  with  another  frequent  expression,  viz.,  "Child  Life  Insurance." 
There  is  no  such  business  as  "  Child  Insurance,"  per  se,  since  not  a  single 
company  confines  its  operations  exclusively  to  the  insurance  of  children, 
and  the  expression  has  no  more  justification  than  there  would  be  in  speak- 
ing of  "  Wife  Insurance  "  because  the  companies,  as  part  of  their  regular 
business,  accept  risks  on  women  as  well  as  on  men.  The  term  ''Child 
Insurance"  or  "Child  Insurance  Companies"  has  of  late  years  been  fre- 
quently employed  by  opponents  to  this  system  of  insurance,  for  the  delib- 
erate purpose  of  misleading  the  public  into  the  belief  that  the  Industrial 
companies  make  a  specialty  of,  or  confine  their  operations  exclusively  to, 
the  insurance  of  children  under  the  age  of  thirteen.  As  a  matter  of  fact, 
the  proportion  of  children  insured  with  the  large  companies  is  practically 
identical  with  the  normal  proportion  of  persons  under  the  age  of  thirteen  in 
the  United  States.  In  The  Prudential  the  proportion  of  deaths  at  ages  one 
to  fifteen,  during  the  period  i89i-'98,  was  23.4  per  cent,  against  a  propor- 
tion of  26.9  per  cent,  for  the  city  of  New  York. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l879~'8o.      121 

mortality  gradually  increases  to  the  oldest  attainable  age,  and  to 
adjust  this  factor  in  an  equitable  manner  The  Prudential  from 
the  beginning  had  followed  the  practice  of  the  English  Prudential 
Assurance  Company,  and  had  devised  a  table  by  which  the  pre- 
miums remained  level  while  the  amounts  payable  at  death  increased 
from  age  i  to  age  13,  after  which  the  amounts  remained  the  same 
for  life,  subject  in  later  years  to  increased  benefits  or  dividends, 
or  surrender-value  privileges,  as  the  case  might  be.  To  illustrate 
this  point,  I  reproduce  in  full  the  first  infantile  table  used  in 
the  United  States  by  The  Prudential  Insurance  Company  of 
America  : — 

FIRST   INFANTILE   RATE   TABLE    USED   BY   THE   PRUDENTIAL. 


TABLE  OF  BENEFITS  PAYABLE  FOR  3  CENTS  A  WEEK. 


No  HIGHER  PREMIUM  CAN  BE  TAKEN. 

(Benefit  payable  if  child  dies  after  three  months  and  within  one  year  after 
policy  has  been  issued.) 


AGK  LAST  BIRTHDAY  WHEN  POLICY  WAS  ISSUED. 


BENEFITS  PAYABLE  IF  CHILD  DIES  AFTER 
THE  POLICY  HAS  BEEN  ISSUED. 

i 

2 

3 

4 

5 

6 

7 

8 

9 

10 

ii 

12 

For  3  months 

$10 

II 

12 
14 
17 
20 

25 
30 

35 

40 

c 

$11 
12 
13 

16 
19 

23 
28 

34 
40 

% 

$12 

*3 
15 
18 

22 
2? 

33 
40 

50 
60 

$13 
14 
17 

21 
26 
32 

40 
So 
60 

$14 
15 

20 
25 
32 
40 

49 
60 

$15 
18 
24 
30 
39 
49 
60 

$18 

22 
29 

38 
48 
60 

$21 
28 

37 
48 
60 

$25 
35 
47 
60 

$33 
46 
60 

$45 
60 

$60 

i  year,  

2  vears 

•3 

4      

6      

8      

10      ...   

ii      

This  table,  according  to  Mr.  Dry  den,  in  a  statement  made 
before  the  Massachusetts  I/egislature  in  1895,  was  the  only 
infantile  table  used  by  the  Company  for  eight  years,  but  at  the 
expiration  of  that  period  it  was  found,  ' '  after  carefully  testing 


122  HISTORY  OF  THE   PRUDENTIAL. 

the  matter, ' '  that  the  laboring  man  needed  more  insurance  for 
his  children,  and  that  higher  premiums  would  have  to  be 
accepted  to  meet  the  needs  and  wants  of  the  industrial  masses  ; 
and  with  this  end  in  view  tables  were  prepared  on  which  five- 
and  ten-cent  premiums  were  accepted,  though  the  general  plan 
and  arrangement  of  the  table  were  not  changed,  being  the  same 
in  theory  as  well  as  in  practice  at  the  present  day. 

The  entire  subject  of  Industrial  insurance,  with  special 
reference  to  valuations  and  reserves,  was  referred  to  a  special 
committee  of  Insurance  Commissioners,  who  in  their  report 
recommended  that  ' '  for  the  purpose  of  computing  reserves  on 
policies  issued  at  the  ages  under  twelve  years  the  valuations 
should  be  as  for  renewable  term  policies,  no  charge  being  made 
for  reserve  upon  policies  running  on  weekly  or  monthly  premi- 
ums, ' '  and,  further,  that  ' '  policies  issued  upon  the  plan  set  forth 
for  sums  under  $500  of  insurance  shall  not  be  held  subject  to 
the  provisions  of  non-forfeiture  acts,  because  of  the  almost 
infinitesimal  amount  of  the  benefit  thereunder  ;  or  to  such  laws 
as  require  notice  of  the  falling  due  of  premiums  to  be  sent  to  the 
policy-holder,  as  the  frequency  of  these  payments  makes  the 
labor  and  expense  of  such  notices  impracticable." 

In  consequence  of  these  recommendations,  by  October,  1880, 
Industrial  insurance  had  a  recognized  standing  before  the  Insur- 
ance. Commissioners  of  the  different  States,  and  a  high  sense  of 
justice  seems  to  have  dictated  the  resolution  that  the  many  intri- 
cate problems  resulting  from  the  practice  should  be  dealt  with 
by  the  companies  in  their  own  way,  in  full  confidence  that  the 
latter  would  deal  equitably  with  their  policy-holders,  in  the  light 
of  their  own  experience  and  in  consequence  of  the  increasing  com- 
petition in  the  number  of  companies  engaged  in  the  business. 

As  the  business  was  extended,  its  technical  side  naturally 
received  increasing  attention.  From  the  beginning,  serious  at- 
tention had  been  given  to  one  of  the  most  important  questions 
with  which  The  Prudential  has  had  to  deal,  and  which  even  at 
the  present  time  represents  one  of  the  most  complex  problems 
in  Industrial  insurance, — namely,  the  question  of  forfeiture  of 
benefits  on  contracts  which  have  been  voluntarily  surrendered 
by  the  insured.  As  has  been  stated,  the  Committee  of  the 
Insurance  Commission  Convention  had  recommended  that  Indus- 
trial policies  should  not  be  subject  to  non-forfeiture  laws,  since 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  iyQ-o.       123 

the  small  amounts  at  risk  would  not  warrant  the  application  of 
non-forfeiture  principles  to  Industrial  policies  ;  neither  was  there 
need  for  legislation  on  the  subject,  since  the  companies  engaged  in 
the  business,  acting  on  competent  actuarial  advice,  had  done  what 
they  could  to  prevent  the  lapsing  of  policies,  first,  by  holding 
agents  personally  responsible  for  such  lapses,*  and,  second,  by 
giving  to  lapsed  policy-holders  not  only  a  period  of  grace  of 
four  weeks,  but  every  opportunity  to  revive  lapsed  policies  with- 
out fines  or  other  expense,  and  subject  only  to  an  examination  or 
evidence  of  the  health  of  the  applicant  at  the  time  of  reinstate- 
ment, to  the  effect  that  applicant  was  not  an  impaired  risk.  The 
Prudential,  however,  early  recognized  the  need  of  energetic  action 
in  reference  to  lapsed  policy-holders,  and  during  the  early  part 
of  1880  issued  a  circular  letter,  which  was  sent  to  policy-holders 
in  default  or  arrears  for  premiums  : — 

[  FORM  No.  146  ] 
THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 


1880. 

M 


Polic  No. 


This  is  to  notify  you  that  I  called  this  day  to  collect  your  Premiums 

now weeks  in  arrears. 

Unless  the  same  are  paid  when  I  call  again,  on next, 

the  rules  of  the  Company  will  compel  me  to  lapse  your  Policy. 

Very  respectfully, 

Agent. 

*  Agents  are  paid  a  commission  for  writing  new  insurances,  but  only  in 
case  an  actual  increase  is  made  in  the  weekly  collectible  premiums.  Thus, 
if  an  agent  lapses  two  policies  for,  say,  twenty  cents  of  weekly  premiums, 
and  writes  three  new  policies  for  thirty-five  cents  weekly  premiums,  he 
will  be  paid  a  commission  on  only  fifteen  cents  of  new  premiums.  By  this 
method  it  is  vitally  to  the  interest  of  every  agent  to  keep  every  policy  in 
force,  since  every  lapse  represents  a  direct  financial  loss. 


124  HISTORY  OF  THE   PRUDENTIAL. 

Should  a  policy  have  lapsed  regardless  of  this  notice  of  warn- 
ing, a  further  notice  was  sent  to  the  lapsed  policy-holder,  offer- 
ing an  opportunity  for  revival  of  the  same  without  loss  or  cost  to 
the  insured,  provided  the  same  was  in  good  health  at  the  time 
application  for  revival  was  made  :— 

NEWARK, 1880. 

I  have  to  inform  you  that  our  Agent  reports  the  premium  on  the 

above  Polic  as  last  paid  for  the day  of 

1880,  and  the  Polic  ha  therefore  been  lapsed. 

A  lapsed  Policy  may  be  revived  upon  paying  the  premiums  in  arrears, 
and  furnishing  satisfactory  evidence  of  the  good  health  of  the  person  upon 
whose  life  the  Policy  was  issued. 

Unless  a  lapsed  Policy  is  so  revived,  all  benefit  under  the  same  is  for- 
feited. Should  you  wish  to  continue  the  insurance,  please  take  this  card 
and  your  Premium  Receipt  Book  to  the  Agent  (or  bring  them  to  this  office), 
and  pay  the  premium. 

I  remain,  very  truly  yours, 

JOHN  F.  DRYDEN, 

Secretary. 

It  is  thus  quite  clear  that  the  Company  made  every  reason- 
able effort  to  keep  the  insured  from  lapsing  his  policy,  or,  if  such 
lapse  had  taken  place,  to  induce  the  lapsed  policy-holder  to  revive 
the  policy  by  payment  of  arrears.  It  is  easy,  of  course,  to  find 
fault  with  this  perhaps  somewhat  crude  arrangement,  but  it  was 
the  best  that  could  be  made  at  the  time  without  placing  in  jeop- 
ardy the  interests  of  persistent  policy-holders,  the  consideration 
of  whom  must  always  outweigh  that  of  those  who,  for  some 
reason  or  other,  default  in  their  contract  obligations. 

What  was  true  of  the  lapse  question  was  equally  true  of  the 
question  of  granting  partial  immediate  benefits.  On  an  Indus- 
trial policy  only  a  single  week's  premium  had  been  paid  to 
secure  the  policy,  and  since,  in  view  of  this  fact,  a  single  five- 
or  ten-cent  premium  made  the  Company  responsible  for  a  con- 
siderable sum,  it  had  been  at  first  the  practice  to  deduct,  in  case 
of  death,  the  unpaid  part  of  the  annual  premium,  computed  on 
the  basis  of  fifty-two  weekly  premiums  payable  during  the 
year.  This  practice  had  not  been  satisfactory  to  the  insured, 
and  the  general  provision  in  adult  policies  was  that,  of  the  sum 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l879~'8o.      125 

insured  for  under  the  policy,  no  benefit  should  be  payable  if  death 
occurred  during  the  first  three  calendar  months  following  the 
date  of  issue  of  the  policy,  one-fourth  of  the  amount  if  death 
occurred  after  three  calendar  months  and  within  six  calendar 
months,  one-half  of  the  sum  insured  for  was  payable  if  death 
occurred  after  six  calendar  months  and  within  one  year,  while 
the  full  amount  of  the  policy  was  not  due  until  the  policy  had 
been  in  force  one  complete  year.  This  precaution  was  justified 
and  made  necessary  by  the  fact  that  no  medical  examination  was 
required  on  policies  for  sums  of  less  than  $200,  while  only  a  super- 
ficial medical  examination  was  required  for  sums  above  that 
amount.  No  doubt,  in  consequence  of  increasing  competition, 
The  Prudential  found  it  necessary,  during  January,  1880,  to 
change  this  plan  and  grant  immediate  benefit  for  one-half  the 
amount  stated  on  the  face  of  the  policy  : — 

NEWARK,  N.  J.,  January  23,  1880. 

Dear  Sir : — By  virtue  of  a  resolution  this  day  passed  by  the  Board  of 
Directors,  all  Adult  Policies  hereafter  issued  by  this  Company  will  be 
placed  in  immediate  benefit  for  one-half  the  amount  stated  on  the  face  of 
the  Policy. 

All  Infantile  Policies  will  also  be  put  into  immediate  benefit  from  day 
of  issue,  instead  of  at  the  expiration  of  three  months  as  heretofore. 

You  are  authorized  to  inform  the  members  in  your  Agency  that  the 
Company  will,  without  expense  to  the  insured,  if  desired,  issue  a  new 
policy  containing  the  stipulation  above  set  forth,  upon  the  policy  being 
forwarded  to  this  office  for  cancellation. 

If  the  member  prefers  to  retain  the  policy  already  issued,  the  Com- 
pany will  treat  Adult  Policies  as  in  one-third  benefit  for  the  first  six  months 
and  two-thirds  benefit  the  last  six  months  of  the  first  year. 

Infantile  Policies  already  issued  will  also  be  treated  as  in  immediate 
benefit. 

I  trust  this  action  of  the  Board  of  Directors  will  be  another  evidence 
to  you  that  THE  PRUDENTIAL,  while  it  is  determined  to  take  no  hazardous 
step,  will  strive  to  deal  with  its  members  in  a  spirit  of  the  utmost  liberality 
consistent  with  safety. 

JOHN  F.  DRYDEN, 

Secretary. 

This  concession  to  the  policy-holders  was  doubtless  prompted 
by  the  increasing  competition  and  consequent  excessive  rivalry 
among  the  agents.  The  business  was  new  and,  as  regards  adverse 
selection,  much  had  yet  to  be  learned.  For  a  time  the  more 


126 


HISTORY  OF  THE   PRUDENTIAL. 


K 


liberal  benefit  provisions  prevailed,  but  subsequent  experience 
proved  that  a  somewhat  more  restrictive  policy  was  necessary 
for  the  protection  of  the  Company  and  its  policy-holders. 

Partly  in  response  to  increasing  competition,  largely  because 
of  an  increasing  demand,  The  Prudential  in  1880  commenced  the 
issue  of  a  new  form  of  Industrial  policy  for  the  round  sum  of 
$500,  with  premiums  differently  adjusted,  but  payable  on  the 
weekly  plan.  A  copy  of  this  table  is  given  below,  together  with 
the  explanatory  statement  that,  in  case  of  death  during  the  first 
policy  year,  one-half  of  the  amount  was  payable,  while  the  full 
amount  was  payable  after  the  policy  had  been  in  force  a  complete 
year  : — 

FIVE-HUNDRED-DOLLAR  ADULT  POLICY  OF  THE   PRUDENTIAL 
INSURANCE  COMPANY  OF  AMERICA. 


AGE  NEXT 
BIRTHDAY. 

WEEKLY 

PREMIUMS. 

AGE  NEXT 
BIRTHDAY. 

WEEKLY 
PREMIUMS. 

20 

$0.24 

43 

$°'5° 

21 

•25 

44 

•52 

22 

.26 

45 

•55 

23 

.26 

46 

•57 

24 

.27 

47 

.60 

8 

!28 

.29 

48 
49 
50 

.62 

2 

28 

•30 

51 

•7° 

29 

•31 

52 

•74 

30 

•32 

53 

•77 

31 

•33 

54 

.80 

32 

33 

•34 
•35 

a 

.84 
.88 

34 
35 
36 

•36 

ii 

a 

59 

2 

.01 

37 

.40 

60 

.08 

38 

.41 

61 

•15 

39 

.42 

62 

.22 

40 

•44 

63 

.28 

.46 

64 

•35 

42 

.48 

65 

•47 

One-half  benefit  first  year  and  full  benefit  after  one  year. 

NOAH  F.  BLANCHARD, 

President. 

JOHN  F.  DRYDEN, 

Secretary. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l879~'8o.      127 

This  table  was  a  decided  boon  for  employees  or  wage- 
earners  of  a  higher  grade,  engaged  in  remunerative  industrial 
occupations,  since  it  made  possible  insurance  on  the  plan  of 
weekly  payments,  combined  with  the  collection  of  the  pre- 
mium from  the  house  of  the  insured,  for  sums  as  high  as 
$1,000,  for  men  who,  on  account  of  their  occupation  or  for 
other  reasons,  were  not  likely  to  obtain  insurance  with  Ordinary 
companies.  It  was  also  the  first  step  in  the  direction  of  what 
in  later  years  became  known  as  Industrial-Ordinary  insurance. 
It  was  a  first  step  in  that  slow  and  difficult  process  of  insur- 
ance education  of  the  masses,  through  the  medium  and  methods 
of  Industrial  insurance. 

With  the  growth  of  the  business,  the  legal  aspect  of  Indus- 
trial insurance,  the  relation  of  the  Company  to  its  policy-holders, 
the  opportunities  for  misunderstanding  and  misconstruction  of 
policy  terms,  as  well  as  the  occasional  instances  of  fraudulent 
practices  on  the  part  of  agents  and  policy-holders,  made  it  neces- 
sary that  the  law  department  of  the  Company  should  be  reorgan- 
ized on  a  more  satisfactory  basis,  and  accordingly  Mr.  Edgar  B. 
Ward,  since  1875  a  Director  and  since  1876  the  Attorney  of  the 
Company,  was  this  year,  under  date  of  February  gth,  elected 
Counsel  and,  subsequently,  Second  Vice-President.  It  is  largely 
due  to  Mr.  Ward's  efforts  that  the  Company  has  had  few  legal 
difficulties,  few  contested  claims  and  practically  no  important 
lawsuits.  As  a  member  of  the  Finance  Committee  Mr.  Ward 
has  given  much  of  his  time  and  devoted  much  of  his  ability  to 
the  investments  of  the  Company  during  the  past  twenty  years, 
and  the  financial  interests  of  The  Prudential  have  been  so  ably 
protected  that  no  life  company  can  boast  of  a  better  record  of 
safe  and  remunerative  investments  than  The  Prudential  Insur- 
ance Company  of  America.  The  Company's  proud  claim  to 
' '  The  Strength  of  Gibraltar  ' '  has  its  foundation  in  the  con- 
servative manner  in  which  its  finances  have  been  managed, 
and  it  is  but  proper  that  full  credit  should  be  given  to 
Mr.  Kdgar  B.  Ward,  as  one  of  the  founders  of  Industrial 
insurance  in  America. 

The  question  of  life  insurance  for  children  for  small  sums 
sufficient  to  pay  the  funeral  expenses,  and  to  provide  for  the  cost 
of  the  last  illness,  received  public  consideration  this  year  not  only 
in  the  insurance  press,  but  in  many  of  the  newspapers  of  the 


128  HISTORY   OF  THE   PRUDENTIAL. 

period.*  I  can  not  do  better  than  quote  from  the  Weekly  Under- 
writer of  July  24,  1880,  an  article  on  this  subject  of  exceptional 
interest : — 

We  have  noticed  recently,  in  several  journals,  an  implied  doubt  of  the 
propriety  of  permitting  the  practice  of  that  part  of  industrial  life  insurance 
which  deals  with  the  infantile  population,  and  a  case  is  cited,  in  Baltimore 
we  believe,  where  there  were  suspicions  of  infanticide  in  connection  with 
the  death  of  a  child  insured  in  one  of  these  companies.  Experience  makes 
sad  work  of  our  theories  sometimes,  and  the  theory  that  murder  will  be 
committed  on  helpless  babes  for  the  small  sums  for  which  they  are  insured 
has  no  basis  of  fact  to  sustain  it. 

We  might  fairly  go  further,  and  say  that  aside  from  the  facts  there  is  no 
reason  to  believe  that  the  natural  love  of  parent  for  child,  which  beats  as 
strongly  under  the  coarser  vest  as  under  the  costliest,  can  be  stifled  and 
changed  to  a  criminal  action  for  a  sum  of  money  which,  at  best,  merely 
provides  a  decent  funeral  for  the  dead  child. 

It  must  be  understood  that  industrial  policies  average  less  than  one 
hundred  dollars  and  that  in  the  case  of  infants,  or  children  under  four 
years,  they  do  not  exceed  one-fifth  of  that  sum,  and  that  they  are  guarded 
against  criminal  intent  in  their  inception  by  very  materially  limiting  the 
benefits  under  them,  for  a  number  of  months.  The  parents  who  would 
murder  a  child  for  the  insurance  would  murder  it  to  avoid  the  burden  of 
supporting  it,  the  lifting  of  which  would  prove  a  far  greater  relief  than  the 
receipt  of  ten  or  fifteen  dollars  of  insurance  money.  Opinions,  however, 

*  An  earlier  attack  on  the  practice  of  insuring  the  lives  of  young  chil- 
dren had  been  made  in  the  Trenton  True  American  under  date  of  March  26, 
1878,  on  the  basis  of  an  article  in  the  Pall  Mall  Gazette  in  which  charges- 
of  child  murder  and  neglect  for  insurance  money  had  been  made  in  the  usual 
manner  without  evidence  or  instances  of  authenticated  facts.  In  com- 
menting on  the  article  the  True  American  said  : — 

"  Such  a  paragraph  as  this  almost  destroys  one's  faith  in  human  nature. 
It  is  difficult  to  conceive  the  deep  depravity  to  which  the  facts  commented 
upon  bear  witness.  But  since  it  does  exist,  it  seems  to  us  that  the  Courts 
should  prevent  its  accomplishing  its  purpose  by  holding  all  policies  of 
insurance  obtained  by  parents  on  the  lives  of  their  children  invalid,  as. 
against  good  morals  and  public  policy.  It  is  not  only  the  inducement 
which  inhuman  parents,  devoid  even  of  that  instinct  which  leads  the  brute 
creation  to  care  for  its  young,  find  in  insurance  on  their  children  to  ill- 
treat  them  or  put  them  out  of  the  way,  but  it  is  the  tendency  to  cause  them 
to  neglect  their  children  in  their  sickness,  and,  moreover,  the  demoralizing 
effect  produced  by  parents  speculating  on  the  lives  of  their  children.  The 
insurance  of  children  by  parents  is  a  reversal  of  the  entire  object  of  life 
insurance,  it  ought  to  be  forbidden  by  law,  and  the  Courts  should  stamp 
it  out  as  a  dangerous  incentive  to  crime."  (Trenton  True  American , 
March  26,  1878.) 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,   iyg-o.      129 

are  of  very  little  use  in  the  presence  of  statistics,  and,  fortunately,  we  are 
not  compelled  to  rely  upon  opinion  in  this  case. 

This  same  charge  was  brought  against  the  business  by  the  Friendly 
Societies  Commissioners  in  England,  who,  commenting  on  the  report  of 
a  select  committee  of  the  House  of  Commons,  state  they  "  can  not  agree 
with  the  opinion  expressed  by  the  House  of  Commons  committee,  that 
the  instances  of  child  murder  with  a  view  of  obtaining  money  from  a  burial 
society  are  very  few."  The  Committee  of  Management  of  the  Royal  Liver 
Friendly  Society,  one  of  the  largest  of  these  societies — we  believe  with 
the  exception  of  the  Prudential  the  largest — immediately  on  becoming 
aware  of  these  opinions  expressed  by  the  commissioners,  resolved  to  make 
a  complete  investigation  of  their  experience,  which  was  done  under  the 
direction  of  Mr.  Sprague,  the  eminent  English  actuary.  His  report,  made 
in  1875,  is  before  us  with  the  figures,  giving  that  society's  experience, 
the  observations  covering  122,696  lives.  His  deduction  from  the  figures 
is : — 

"An  examination  of  these  figures  proves  conclusively  that  the  sus- 
picions of  the  commissioners  are  unfounded  as  regards  the  children  insured 
with  the  Royal  Liver  Society.  If  any  appreciable  number  of  such  children, 
residing,  for  example,  in  Liverpool,  were  destroyed  by  their  parents  or 
other  persons  in  charge  of  them,  for  the  sake  of  obtaining  the  insurance 
money,  it  is  clear  that  the  mortality  among  the  children  whose  lives  were 
insured  in  the  Liverpool  district  would  exceed  that  among  the  children 
belonging  to  the  general  population  of  Liverpool.  But  instead  of  this  the 
exact  contrary  is  the  case.  The  rate  of  mortality  among  the  insured 
children  is  very  greatly  less. ' ' 

Mr.  Sprague's  testimony,  or  rather  the  testimony  of  his  figures,  does 
not  stand  alone.  Any  person  who  reads  the  history  of  the  Prudential 
Assurance  Company  can  not  accuse  its  manager,  Mr.  Henry  Harben,  of 
carelessness  in  arriving  at  conclusions.  Every  step  in  the  progress  of  that 
company  has  been  marked  by  the  most  painstaking  care  and  the  most 
laborious  study.  In  recording  its  experiences  on  infant  lives,  Mr.  Harben 
says  : — 

"The  records  of  the  policies  issued  under  this  table  have  been  most 
carefully  observed,  and  while  the  numbers  of  lives  admitted  are  counted 
by  millions,  the  experience  of  the  company  completely  negatives  the  idea 
that  malfeasance  generally  is  practiced,  for  in  the  twenty  years  during 
which  the  practice  of  infantile  assurance  has  been  carried  on,  no  such  case 
has  been  known  to  have  occurred,  and  only  two  in  which  the  circumstances 
were  of  a  distinctly  suspicious  character." 

This  would  seem  to  close  the  case  as  far  as  the  business  in  Great 
Britain  is  concerned.  It  may  fairly  be  presumed  that  the  companies 
engaged  in  industrial  insurance  in  the  United  States  have  given  this 
subject  some  thought  before  engaging  in  it.  Certainly,  all  the  arguments 
for  the  views  of  those  who  consider  infantile  insurance  provocative  of 
murder  are  stronger  in  England  than  in  the  United  States.  Among  our 
population  children  are  not  felt  to  be  the  burden  they  are  in  more  crowded 
communities.  We  have  not  yet  arrived,  as  England  has,  at  a  point  where 


130  HISTORY   OF  THE   PRUDENTIAL. 

a  restriction  of  the  birth-rate  is  discussed  as  a  question  of  moment.  Oppor- 
tunities for  parents  to  become  proud  of  their  children  are  more  plentiful 
here  than  in  Europe. 

If,  then,  we  find  as  an  actual  fact  that  no  such  calamity  as  child 
murder  follows  infantile  insurance  among  the  crowded  and  squalid  popula- 
tion of  London  and  Liverpool  and  Birmingham,  there  is  little  reason  to 
apprehend  it  in  New  York  or  Boston  or  Philadelphia;  and  no  cause  for 
doubting  the  wisdom  of  a  scheme  which  promises  the  benefits  of  life  insur- 
ance in  small  quantities  to  those  who  are  unable  to  buy  in  large  quantities. 

This  plain  statement  of  the  merits  of  the  case  in  the  Weekly 
Underwriter  is  deserving  of  the  most  serious  consideration  on  the 
part  of  those  who  would  find  fault  with  the  practice  of  Industrial 
insurance  companies  in  accepting  risks  on  the  lives  of  young 
children  for  small  amounts. 

The  Prudential  had,  from  the  beginning,  carefully  observed 
the  local  conditions  affecting  the  business,  with  special  reference 
to  that  part  or  branch  which  concerned  the  insurance  of  children  at 
young  ages,  and  by  1880  it  was  demonstrated,  by  the  vital  statistics 
of  the  city  of  Newark,  that  instead  of  there  having  been  an  increase 
in  the  mortality  of  children  since  the  commencement  of  Industrial 
insurance,  there  had  actually  been  a  material  decrease,  so  much  so 
that,  while  the  number  of  deaths  at  ages  one  to  nine,  inclusive, 
had  been  1,058  during  1876,  there  had  been  934  deaths  during  1877, 
722  deaths  during  1878,  618  deaths  during  1879,  and  only  520 
deaths  during  1880.  This  was  in  a  city  where  The  Prudential 
had  transacted  the  larger  part  of  its  business,  and  where  a  con- 
siderable number  of  children  over  the  age  of  one  had  been  insured. 
From  that  day  to  this  the  mortality  of  children,  not  only  in  the  city 
of  Newark,  but  in  all  the  cities  in  the  State  of  New  Jersey  where 
Industrial  insurance  is  transacted,  has  materially  decreased.  It 
certainly  stands  to  reason  that  if  the  insurance  of  children  had 
exerted  an  unfavorable  influence  on  the  duration  of  child  life  this 
considerable  decrease  in  the  mortality  would  have  been  impossi- 
ble in  a  State  where,  at  the  present  time,  the  larger  portion  of  the 
child  population  is  insured  in  Industrial  companies.  The  subject 
has  received  further  attention  during  later  years,  and  will  be 
referred  to  again  in  its  proper  place. 

By  slow  degrees  the  opinion  of  the  insurance  journals  and 
intelligent  public  opinion  in  general  changed  to  a  uniform  ap- 
proval of  the  system  of  Industrial  insurance.  It  was  becoming 
apparent  that  the  new  form  of  life  insurance  was  unlikely  to  prove 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l879~'8o.      131 

a  dangerous  element  as  regards  the  mortality  of  children,  or  an 
undesirable  factor  in  competition  with  Ordinary  companies,  but 
rather,  to  the  contrary,  it  was  evident  that  the  general  diffusion  of 
insurance  knowledge  and  principles  among  the  masses  was  likely 
to  increase  very  materially  the  general  demand  for  life  insurance 
on  the  Ordinary  plan.  A  very  clear  and  comprehensive  view  of 
the  matter  is  to  be  found  in  an  article  in  the  Insurance  Times  for 
March,  1880,  from  which  I  quote  : — 

In  this  way  a  poor  man  may  provide  an  adequate  burial  fund  for  a  mem- 
ber of  his  family,  which  the  companies  agree  to  pay  almost  at  once.  They 
have  a  paid-up  capital,  and  an  accumulated  surplus,  giving  security  to 
every  one.  How  widely  such  companies  differ  from  the  loose  co-operative 
companies,  will  be  evident  to  the  most  casual  observer.  The  Prudential 
complies  with  the  law,  makes  a  lawful  contract,  and  engages  to  fulfill  its 
contract  according  to  law.  It  has  capital  to  fall  back  upon,  and  voluntarily 
submits  to  all  the  conditions  which  the  law  imposes.  On  the  other  hand, 
the  co-operative  companies  are  a  law  unto  themselves,  and  they  submit  to 
no  other  law.  They  have  no  legal  contract  to  bind  them  ;  and  if  they 
please  to  pay,  they  pay  ;  and  if  they  do  not  please  to  pay,  they  keep  the 
funds  that  have  been  committed  to  them.  Any  Prudential  company  is 
better  than  such  rotten  associations  as  these.  Happy  will  it  be  for  the 
States  if  the  Prudential  companies  should  drive  the  co-operative  companies 
out  of  the  country. 

How  far  the  Industrial  insurance  companies  succeeded  in 
counteracting  the  evil  of  the  increasing  number  of  assessment 
insurance  societies,  it  is  as  yet  too  difficult  to  state,  for,  not  only 
are  the  statistics  of  fraternal  insurance  incomplete  and  largely 
misleading,  but  the  subtle  evil  which  underlies  these  institutions 
has  become  too  widely  disseminated  to  become  easily  eradicated. 
It  may  with  perfect  truth  be  stated  of  those  who  originated  and 
promoted  the  thousands  of  so-called  fraternal  or  mutual-benefit  aid 
societies,  as  Dr.  Hodgkin  once  said  of  certain  English  Friendly 
Societies  in  a  little  volume  on  "Health,"  published  in  1841, 
that  ' '  whilst  none  but  an  accomplished  mathematician  would 
think  of  producing  an  almanac  in  which  astronomical  predictions 
should  be  given,  almost  any  set  of  men,  who  withdraw  from  the 
tap-room  to  the  comparatively  quiet  parlour  of  an  inn,  seem  to 
think  themselves  qualified,  with  the  assistance  of  the  landlord's 
arithmetic,  to  devise  the  plan  of  a  Benefit  Society."  It  is  the 
plain  truth  that  the  majority  of  benefit  societies  or  secret 
orders  containing  in  their  charters  an  insurance  provision,  or  aim- 
ing at  the  transaction  of  an  insurance  business,  have  been  founded 


132  HISTORY   OF   THE   PRUDENTIAL. 

by  men  ignorant  of,  or  indifferent  to,  the  principles  of  life  insur- 
ance, the  elements  of  finance  and  the  law  of  human  mortality  on 
which  the  business  is  founded. 

However  much  Industrial  insurance,  as  practiced  by  The 
Prudential,  may  have  fallen  short  in  meeting  the  needs  and  wants 
of  the  industrial  population,  it  has  at  least  accomplished  one 
of  the  principal  objects  for  which  it  was  organized  :  it  has  paid 
the  claims  which  have  matured,  and  the  companies  will  always  be 
able  to  meet  their  obligations,  founded,  as  they  are,  on  scientific- 
ally constructed  tables  of  mortality  and  finance.  No  Industrial 
insurance  company  in  this  country  has  ever  failed  and  none  is 
ever  likely  to  fail,  except  on  account  of  possible  dishonesty, 
which  must  be  taken  into  account  in  all  financial  operations  ; 
but  the  companies  can  never  fail  on  account  of  inherent  weakness, 
false  principles,  or  erroneous  practice,  in  view  of  the  soundness  of 
the  basis  on  which  the  business  rests. 

I  have  previously  pointed  out  that  by  November,  1879,  the 
Metropolitan  L,ife  Insurance  Company  of  New  York  had  also  com- 
menced the  transaction  of  Industrial  insurance.  Contrary  to  the 
course  followed  by  The  Prudential,  the  Metropolitan  imported  a 
large  number  of  superintendents,  assistants  and  agents  from 
Kngland,  and  at  once  extended  its  operations  over  a  large  num- 
ber of  the  States,  making  possible  the  more  rapid  extension  of 
the  business,  which  gave  the  company  a  lead  which  it  has  main- 
tained up  to  the  present  time.  The  Metropolitan  had  for  many 
years  transacted  an  Ordinary  business,  had  a  large  capital,  a  well- 
equipped  office  force  and  local  offices  in  many  parts  of  the  country, 
enabling  it,  with  the  assistance  of  a  large  number  of  men  expe- 
rienced in  the  Industrial  business,  to  at  once  take  the  position  of 
numerical  leadership,  which  it  has  successfully  maintained  for 
the  past  twenty  years. 

During  the  year  1880  The  Prudential  had  continued  to  make 
considerable  progress,  and  by  December  31,  1880,  there  were 
87,462  policies  in  force  for  the  sum  of  $7,347,892.  Of  this 
sum  the  larger  proportion  was  confined  to  the  State  of  New 
Jersey,  the  operations  in  New  York  and  Pennsylvania  being 
as  yet  very  limited  in  extent.  The  results  obtained  were  satis- 
factory to  the  Company,  which  even  at  this  early  date  followed 
its  maxim — to  be  satisfied  with  an  improvement  from  year  to 
year  of  its  own  previous  record. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,   l88l-'84.      133 


CHAPTER  IX. 

THE   PRUDENTIAL   INSURANCE   COMPANY   OF   AMERICA, 

1881-1884. 

During  the  early  stages  of  all  commercial  development, 
excessive  and  often  unfair  competition  is  inevitable.  Men 
anxious  to  succeed  in  any  given  direction,  partly  ignorant  of 
the  means  and  largely  ignorant  of  attainable  results,  will  ever 
and  again  fall  short,  and  give  undue  weight  to  factors  and  ele- 
ments of  least  importance,  and  but  small  attention  to  factors 
and  elements  of  most  importance.  Nations,  as  well  as  individu- 
als and  corporations,  will  enter  into  war  with  each  other,  which, 
but  for  a  saving  remnant  of  common  sense,  would  often  prove 
mutually  destructive.  With  a  field  open  to  all,  and  with  bound- 
less opportunities,  men  and  companies,  during  the  early  days  of 
Industrial  insurance,  struggled  more  against  each  other  than 
they  struggled  for  the  essential  interests  of  each  and  all,  Indus- 
trial insurance  companies,  no  more  than  Ordinary  insurance 
companies  or  fraternal  societies,  or  business  enterprises  of  any 
kind ;  but  it  is  something  considerably  to  the  credit  of  The 
Prudential  that,  from  the  first,  it  never  concerned  itself  with 
the  success  or  efforts  of  other  companies,  being  satisfied  to 
attain  its  own  place  in  the  business  world  in  its  own  way.  In 
the  beginning  it  discouraged  agents  from  methods  of  unfair 
competition,  from  making  attacks  on  other  companies  and  other 
methods  of  insurance,  and  to  this  policy  it  has  remained  faithful 
up  to  the  present  time.  For  a  number  of  years,  however,  the 
Company  was  drawn  into  the  vortex  of  a  competitive  struggle, 
which  did  not  come  to  an  end  until  about  1884. 

As  an  evidence  of  the  increasing  local  approval  of  the 
Company  and  its  methods,  I  quote  the  following  extract  from  the 
Sunday  Call  of  December  18,  1881  : — 

To  say  at^-thing  in  this  city  in  praise  of  The  Prudential  Insurance 
Company,  whose  office  is  at  No.  215  Market  street,  is  like  "carrying  coals 
to  Newcastle." 


134  HISTORY   OF  THE   PRUDENTIAL. 

Everybody  in  Newark  knows  this  company  and  knows  its  honorable 
record.  It  has  paid  so  many  claims  here  that  it  would  probably  be  difficult 
to  find  a  person  in  our  industrial  population  who  has  not  had  come  under 
his  own  personal  observation  the  benefits  derived  from  insuring  in  this 
company.  Who  is  there  in  Newark  who  does  not  know  of  a  relative  or  a 
friend  whose  necessities  have,  not  thus  been  relieved  in  that  saddest  of  all 
hours,  when  the  dark  shadow  of  death  enters  the  door  ?  It  is  no  wonder 
that  the  company  has  such  a  marvellous  hold  upon  the  confidence  and 
good-will  of  our  people. 

With  more  than  35,000  policies  in  force  upon  the  lives  of  persons  in 
Newark,  who  pay  their  premiums  weekly  to  the  agents  of  The  Prudential 
with  the  regularity  of  clockwork,  that  company  will  continue  to  exercise 
a  powerful  influence  over  the  social  well-being  of  our  people.  Besides  its 
fair  record  The  Prudential  has  the  prestige  of  being  the  first  to  introduce 
into  this  country  the  present  and  only  plan  of  industrial  insurance,  which 
has  proven  a  permanent  success.  In  addition  to  this  the  company  is 
sound,  and  is  managed  with  tact,  prudence,  and  in  a  spirit  of  fairness  that 
makes  the  interests  of  its  policy-holders  safe. 

And,  as  further  evidence  of  the  increasing  influence  of  the 
Company  beyond  the  large  cities  of  the  State,  I  give  an  extract 
from  the  Metuchen  Inquirer  of  October  20,  1881,  as  follows  : — 

The  plan  of  insurance  offered  by  The  Prudential  Insurance  Company 
places  insurance  within  the  reach  of  all,  rich  or  poor.  For  years  the  poor 
man  was  shut  out  completely  from  the  benefits  of  life  insurance.  The 
establishment  of  The  Prudential  Insurance  Company,  of  Newark,  N.  J., 
arose  entirely  from  the  necessity  of  giving  the  poor  man  some  means  of 
providing  for  those  from  whom  death  would  separate  him,  and  at  a  slight 
cost,  payable  in  instalments,  so  arranged  as  to  fall  due  weekly,  and  at  a 
rate  which  brings  the  desired  benefits  within  the  reach  of  all,  no  matter 
how  poor  the  man  may  be,  who  wishes  to  make  such  provision  for  the 
future.  The  company,  by  always  paying  the  claims  brought  against  it,  has 
won  the  entire  confidence  of  the  public.  No  man  can  hesitate  a  moment 
to  secure  the  means  of  providing  a  decent  burial  for  himself  or  of  a  member 
of  his  family,  or  of  leaving  behind  him  means  of  supporting  his  dear  ones, 
at  so  trifling  a  cost.  Men,  women  and  children,  even  infants  of  one  year 
of  age,  can  be  insured  in  this  model  organization,  and  the  weekly  payments 
required  are  so  small  that  any  one  can  afford  to  pay  them.  Thousands 
take  this  means  of  securing  themselves  from  receiving  a  pauper  funeral. 

It,  however,  was  not  only  from  the  local  press  that  Industrial 
insurance  received  unqualified  endorsement.  Among  others,  the 
Superintendent  of  Insurance  of  the  State  of  New  York  referred 
to  the  subject  in  his  annual  report  for  1881  in  the  following 
manner  : — 

This  class  of  insurance  is  somewhat  new,  and  is  yet  an  experiment  in 
this  country,  but  thus  far  it  seems  to  meet  with  success  which  promises 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l88l-'84.       135 

well  for  its  future  growth  and  prosperity.  Its  scope  and  plan  involve 
insurance  on  the  lives  of  laboring  men  and  their  families  for  small  sums 
ranging  from  a  few  dollars  upwards,  and  the  payment  of  premiums  in 
weekly  sums  of  a  few  cents.  Success  in  this  branch  of  business  is  only 
attainable  by  the  issuance  of  a  vast  number  of  policies  and  their  diffusion 
in  the  large  cities  among  the  masses  of  people.  One  company  in  New 
York,  the  Metropolitan,  has  issued,  during  the  past  year,  more  than  two 
hundred  thousand  of  these  policies.  As  the  ability  of  the  class  of  people 
who  take  these  policies  depends  entirely  upon  their  steady  employment, 
and  upon  their  habits  of  prudence  and  economy,  there  are,  naturally, 
numerous  lapses,  a  number  for  which  the  average  of  the  ordinary  business 
is  no  proper  criterion.  The  companies  which  appear  to  be  successfully 
prosecuting  this  class  of  business  have  uniformly  afforded  every  facility 
possible  to  enable  the  lapsed  policies  to  be  renewed  again  upon  just  and 
equitable  terms,  and,  so  far,  there  have  been  no  complaints  of  policy- 
holders  in  that  direction.  But  such  companies  may  not  always  be  in  the 
hands  of  men  who  will  be  governed  by  these  honorable  principles,  and  the 
protection  to  which  their  policy-holders  are  equitably  entitled  should  be 
made  a  matter  of  legal  regulation.  The  law  under  which  these  companies 
act  is  the  general  life  insurance  law  of  the  State.  While  this  law  does  not^ 
prohibit  the  issuance  of  such  policies,  or  the  payment  of  premiums  in  these 
weekly  sums,  it  is  not  believed  that  such  a  system  was  contemplated  when 
the  law  was  passed.  It  seems,  therefore,  that  some  provision  should  be 
adopted  prescribing  more  particular  regulations  and  requirements  to  this 
class  of  business. 

The  superintendent  seems  to  have  fully  recognized,  the  merits 
of  the  business,  while  at  the  same  time  conscious  of  technical  diffi- 
culties, one  of  which,  the  question  of  reserves,  has  been  previously 
dealt  with.  On  the  question  of  lapses  he  pointed  out  that  forfeit- 
ures in  Industrial  insurance  could  not  be  compared  with  forfeit- 
ures in  Ordinary  insurance,  for,  as  a  moment's  consideration  will 
show,  the  policy-holder  in  an  Ordinary  company  has,  at  the  most, 
four  chances  to  lapse  his  policy  during  the  year,  while  the  Indus- 
trial policy-holder  has  fifty-two  chances  to  cancel  his  policy  for 
some  cause  or  other,  and,  again,  while  the  policy-holder  in  an 
Ordinary  company  has  usually  paid  at  least  one  quarter's  premium 
of  some  material  consequence,  the  Industrial  policy-holder 
will,  in  most  cases,  have  paid  nothing  at  all,  or  but  a  few  dimes, 
for  which  he  will  have  received  from  six  to  eight  weeks  of 
insurance  protection.  There  was,  however,  no  need  for  special 
legislation  on  the  subject,  for,  as  was  well  said  by  the  Weekly 
Underwriter,  "It  does  not  follow,  as  a  political  axiom,  that 
because  a  particular  business  has  not  been  legislated  upon,  there- 
fore legislation  is  needed.  There  are  a  great  many  enterprises 


136  HISTORY   OF   THE   PRUDENTIAL. 

that  succeed  very  well  without  special  legislation,  and  Industrial 
insurance  is  fully  as  likely  to  succeed  without  legislation  as 
with  it." 

On  one  point,  however,  considerable  difficulty  was  experi- 
enced on  the  part  of  The  Prudential  in  entering  the  State  of 
New  York.  It  would  seem  that  the  authority  of  the  Company  to 
do  business  in  the  State  of  New  York  had  not  been  renewed  for 
1 88 1,  and  that  the  Company  had  made  no  application  for  a  license 
that  year.  In  the  Spectator  for  April,  1881,  however,  there  is  an 
article  which  would  indicate  the  difficulty,  in  that  it  was  purely  a 
question  of  license  fee  which  The  Prudential's  New  York  repre- 
sentative ought  to  pay.  In  the  words  of  the  Spectator  :— 

The  laws  of  New  York  and  New  Jersey  are  reciprocal  in  effect.  Indus- 
trial insurance  is  especially  peculiar  in  the  numerous  solicitors  required  to 
conduct  it  successfully,  each  agent,  as  compared  with  Ordinary  life-insur- 
ance representatives,  handling  a  very  small  amount  of  money.  And  here 
is  where  the  difficulty  arose  when  the  Company  first  entered  the  State. 
The  Insurance  Department  at  length  determined,  under  recommendation 
of  the  Attorney-General,  to  construe  Industrial  superintendents  and  assist- 
ant superintendents  of  The  Prudential  in  New  York  as  corresponding  with 
Ordinary  life-insurance  agents,  and  under  the  New  Jersey  law  charged 
them  $22  each  for  the  State  license  fee.  The  New  Jersey  Legislature,  at 
its  last  session,  amended  the  license  law  by  providing  that  agents  and 
solicitors  of  Industrial  companies  should  be  taxed  $2  each.  Of  course, 
this  had  a  corresponding  effect  upon  The  Prudential's  licenses  in  New  York. 
But  the  New  York  Department  goes  further,  and  disregarding  its  previous 
decision,  claims  that  $22  should  be  paid  by  each  of  the  Company's  solicitors 
for  last  year.  The  Prudential,  of  course,  feels  aggrieved,  and  is  looking 
towards  a  more  equitable  arrangement  that  shah1  recognize  a  difference  be- 
tween its  small  army  of  solicitors  and  its  superintendents  of  districts. 
The  latter  it  is  willing  to  pay  for  at  the  rate  of  $22  each,  but  to  pay  that 
sum  for  each  solicitor  would  be  a  high  price  to  pay  for  the  privilege  of 
doing  business  in  the  State.  The  Company  has  a  large  and  growing  busi- 
ness in  New  York,  and  will  doubtless  renew  its  power  to  continue  business 
in  any  event. 

The  point  involved  was  a  most  serious  one,  since  excessive 
license  fees  would  very  largely  increase  the  expense-rate  of  the 
Company.  The  matter  however  was  equitably  adjusted  and  the 
Company  resumed  business. 

From  the  very  beginning,  as  I  have  had  more  than  one  occa- 
sion to  point  out,  the  managers  of  The  Prudential  had  given 
thoughtful  consideration  to  the  large  number  of  technical  ques- 
tions and  problems  which  were  constantly  pressing  for  solution. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  1881-^84.      137 

Reference  has  been  made  to  the  question  of  reserves,  to  the  ques- 
tion of  immediate  benefit,  to  the  insurance  of  children,  to  the 
surrender  value  of  policies,  etc.,  but  during  the  early  part  of  1881 
a  new  problem  presented  itself,  which  the  Company  dealt  with,  as 
in  all  other  matters,  solely  on  the  basis  of  facts  as  they  were  avail- 
able for  the  purpose  of  aiding  the  Company  in  arriving  at  an  equit- 
able decision.  Thus  far  negroes  had  not  been  seriously  considered 
as  applicants  for  Industrial  insurance,  but  with  the  increasing 
extent  of  the  business  the  colored  population  had  also  become 
considerably  interested  in  the  subject,  and  was  now  in  increasing 
numbers  availing  itself  of  this  opportunity  to  provide  for  the 
contingencies  of  life.  Careful  investigations,  including  the 
Company's  own  experience,  and  data  collected  for  a  large  num- 
ber of  American  cities,  pointed  to  an  excessive  mortality  among 
this  element  of  the  population,  so  much  so  that  it  became 
apparent  that  unless  the  Company  adopted  a  restrictive  course 
it  would  soon  find  itself  in  difiiculties  because  of  inordinate 
losses  experienced  on  this  class  of  policy-holders.  Under  date 
of  March  loth,  therefore,  the  Company  issued  a  circular  to 
superintendents  and  agents  on  the  subject  of  colored  risks,  of 
which  the  following  is  a  copy  : — 

NEWARK,  N.  J.,  March  10,  1881. 
To  SUPERINTENDENTS  AND  AGENTS. 

The  following  changes  will  be  made  with  respect  to  colored  persons 
(Negroes),  applying  for  assurance  in  this  Company,  under  policies  issued 
on  and  after  the  week  commencing  Monday,  March  28,  1881.  (This 
applies  to  all  APPLICATIONS  taken  during  the  week  commencing  Monday, 
March  2ist.) 

1.  Under  Adult  Policies  the  sum  assured  will  be  ONE-THIRD  less  than 
now  granted  for  the  same  weekly  premium. 

2.  Under  Infantile  Policies  the  amount  assured  will  be  the  same  as 
now,  but  the  weekly  premium  will  be  increased  to  FIVE  CENTS. 

These  changes  are  made  in  consequence  of  the  excessive  mortality  pre- 
vailing in  the  class  above  named ;  they  do  not  apply  to  other  persons. 
Policies  issued  prior  to  March  28th  will  not  be  affected  by  this  regulation. 

Rate  tables  for  use  with  Colored  Applicants  will  be  duly  sent  you. 

Agents  using  Infantile  Applications  in  which  the  question  of  "  Race" 
is  not  asked,  should  write  on  the  lower  margin  on  the  back  of  the  applica- 
tion the  word  "white"  or  "  colored  "  as  the  case  may  be — unless  this  is 
done  the  application  will  be  returned  for  correction. 

JOHN  F.  DRYDEN, 

Secretary. 


'38 


HISTORY  OF  THE   PRUDENTIAL. 


The  following  is  an  abbreviated  copy  of  the  first  rate  table 
used  for  colored  adult  applications  : — 

ADULT  RATE  TABLE  FOR  COLORED  RISKS. 
FIRST  USED  APRIL  4,  1881. 


WEEKLY   PREMIUMS. 


AGES. 

FIVE  CENTS. 

TEN  CENTS. 

TWENTY-FlVE 

CENTS. 

FIFTY  CENTS. 

13 

$78  oo 

15 

76  oo 

20 

68  oo 

$136  oo 

25 

60  oo 

1  2O  OO 

$300  oo 

30 

52  oo 

104  oo 

260  oo 

35 

45  oo 

90  oo 

225  oo 

40 

37  oo 

74  oo 

185  oo 

45 

30  oo 

60  oo 

150  oo 

$300  oo 

50 

24  oo 

48  oo 

120  00 

240  oo 

g 

19  oo 

38  oo 
30  oo 

95  co 

75  oo 

190  oo 
150  oo 

65 

22  OO 

55  oo 

70 

40  oo 

This  action  on  the  part  of  The  Prudential  was  fully  justified 
by  the  available  statistical  information  on  the  subject.  Reference 
to  any  health  report  of  a  Southern  or  Northern  city  covering  the 
years  1880-1881  will  clearly  prove  that  the  general  death-rate  of 
the  colored  population  was  about  50  per  cent,  in  excess  of  the 
death-rate  of  the  white  population. 

Thus,  for  instance,  according  to  the  health  report  for  Savan- 
nah, Ga.,  the  average  annual  death-rate  of  the  white  population 
was  38.6  per  1,000,  while  for  the  colored  population  the  rate  was 
51.7  per  i,ooo.  For  New  Orleans  the  white  rate  had  been  31.3 
per  i,ooo,  against  the  colored  rate  of  40.2  per  1,000.  For  Mobile 
the  white  rate  had  been  24.6  per  1,000,  against  the  colored  rate  of 
39.7  per  1,000,  and  this  difference  in  the  mortality  rate  of  the  two 
races  held  true  for  all  the  other  cities  for  which  information  was 
available.  In  view  of  these  facts,  taken  in  connection  with  the 
actual  experience  of  the  Company,  the  action  of  The  Prudential 
was  not  only  justified,  but  necessary  for  its  own  safety  and  in 
equity  to  the  white  policy-holders,  who  as  a  class  are  subject  to  a 
mortality  less  than  two-thirds  as  high  as  the  rate  prevailing  among 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  1881-^84.       139 

the  colored  population.  The  position  assumed  was,  therefore, 
justified  by  the  available  facts,  and  the  Company  has  not  receded 
from  this  course,  although,  under  laws  since  passed,  life-insurance 
companies  are  now  compelled  in  most  of  the  States  to  grant  equal 
benefits  for  the  same  premiums  to  both  races,  in  defiance  of  the 
laws  of  mortality  and  ordinary  business  conduct.  Since  that  date 
a  large  amount  of  information  on  the  subject  of  negro  mortality 
has  been  collected,  but  no  subsequent  investigation  has  proven 
that  the  Company's  position  in  the  matter  was  erroneous  or 
unjustified  or  overcautious,  and,  while  the  Company  at  the 
present  time  accepts  applications  from  negroes  and  issues  policies 
without  rating,  it  does  not  solicit  this  class  of  risks,  and  has, 
therefore,  comparatively  few  colored  persons  as  policy-holders 
on  its  books.* 

The  question  of  expenses  in  conducting  the  business  of 
Industrial  insurance  received  due  consideration,  especially  in  the 
insurance  journals  of  the  period,  largely  in  consequence  of  a 
suit  of  the  British  Prudential  against  the  Western  Provident, 
referred  to  at  considerable  length  in  the  Insurance  Monitor  under 
date  of  September,  1881.  During  the  trial  of  the  case  some  very 
interesting  evidence  relative  to  the  Industrial  expense-rate  was 
brought  out  in  the  examination  of  Mr.  Arthur  H.  Bailey,  the  well- 
known  actuary,  who  testified  that  the  lapsed  policies  were  a  serious 
Jinancial  loss  to  the  Industrial  companies,  the  more  so  in  view  of  the 
fact  that,  since  ''profit  which  the  companies  might  have  expected 
to  make  from  the  premiums  payable  in  succeeding  years  would, 
of  course,  be  lost  in  case  of  the  lapse  of  the  policy. ' '  In  further 
explanation  of  this  interesting  point  in  life-insurance  practice,  I 
quote  from  the  Spectator  of  September  i,  1881,  a  contribution 
evidently  from  the  pen  of  Mr.  Dryden  : — 

There  has,  at  one  time  or  another,  been  a  great  deal  of  nonsense  said 
about  The  Prudential  and  its  system  of  insurance,  by  those  who  do  not 
understand  it.  Nobody  can  suppose  that  a  policy  for  $50,  upon  which  pre- 
miums have  to  be  collected  at  the  member's  house  fifty-two  times  a  year, 
can  be  taken  care  of  at  as  low  a  rate  of  expense  as  a  policy  for  $5,000,  upon 
which  the  premium  is  payable  but  once  annually,  and  that  in  advance.  In 


*  For  a  full  discussion  of  the  entire  subject  of  negro  mortality,  see  the 
writer's  work  on  "The  Race  Traits  and  Tendencies  of  the  American  Negro," 
Macmillan  &  Co.,  New  York,  1896. 


140  HISTORY  OF  THE   PRUDENTIAL. 

every  branch  of  business  the  small  buyer  pays  higher  for  his  goods  than  the 
large  one.  It  is  an  inevitable  result  of  the  laws  of  trade  and  commerce. 
Nevertheless,  the  poor  man  must  buy  in  small  quantities  or  he  can  not  buy 
at  all.  The  question  is,  Shall  he  be  enabled  to  buy  in  such  quantities  as 
his  limited  means  permit?  Some  years  since,  Henry  Harben,  the  then 
Secretary  of  the  [British]  Prudential,  read  a  paper  upon  his  company 
before  the  Institute  of  Actuaries.  At  its  close  this  very  phase  of  the 
company's  business  came  up.  Such  eminent  actuaries  as  Messrs.  Brown, 
Bailey,  Walford,  Sprague  and  others  participated  in  the  discussion,  and 
there  seemed  to  be  no  dissent  from  the  views  uttered  by  some  of  them, 
that  the  expense  was  entirely  proper,  was  inseparable  from  the  business, 
and  that  if  the  laboring  man  wanted  exceptional  privileges  he  must  expect 
to  pay  for  them.  This  is  the  true  and  sensible  view  to  be  taken  of  this 
matter. 

The  suggestion  of  The  Indicator,  that  insurance  should  be  established 
and  carried  on  by  the  co-operation  of  employers,  has  been  again  and  again 
tried  and  proved  a  failure.  No  success  can  be  obtained  except  through  the 
aid  of  a  well-organized  and  systematized  agency  department.  The  men 
employed  for  this  work  must  be  paid.  Some  years  ago  The  Prudential 
made  the  experiment,  in  one  of  our  large  districts,  of  offering  a  rebate  to 
those  of  its  members  who  would  go  to  the  office  and  pay  their  premiums. 
The  experiment  was  a  failure  and  had  to  be  abandoned.  The  effort  of  the 
government  to  introduce  insurance  among  the  working  classes  in  England 
utterly  failed.  Managers  of  a  company  like  The  Prudential  have  every 
inducement  to  keep  the  expenses  down  to  the  lowest  point  possible,  and 
we  think  it  fair  to  assume  they  do  so.  We  believe  the  Prudential  has  been 
an  inestimable  blessing  to  the  workingmen  of  England,  and  that  the  com- 
panies engaged  in  the  same  line  of  business  here  will  prove  of  like  advan- 
tage to  our  people. 

J.  F.  D. 

The  position  taken  by  Mr.  Dryden  may  be  summed  up  in 
the  statement  that  ' '  the  expense  was  entirely  proper  and  insepa- 
rable from  the  business, ' '  in  view  of  the  fact  that  the  premiums 
had  to  be  collected  from  the  house  of  the  insured,  that  the  neces- 
sary supervision  and  auditing  of  amounts  required  a  much  larger 
amount  of  clerical  labor,  and  that  the  general  methods  of  con- 
ducting the  business  differed  widely  from  the  methods  prevailing 
in  Ordinary  insurance,  where  each  transaction  required  less  labor 
and  was  subject  to  less  expense  than  was  the  case  in  Industrial 
insurance. 

However  much  may  be  said  on  the  question  of  expense,  it  is 
one  which  has  never  hindered  the  development  of  the  business,  it 
is  one  which  has  been  subject  to  considerable  modification,  and 
which  will  undoubtedly  be  materially  improved  upon  in  the  course 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l88l-'84.       141 

of  the  years,  as  the  business  becomes  older  and  the  agency  staff 
becomes  more  permanent. 

It  must  be  plain  to  any  one  familiar  with  the  history  of 
industrial  progress,  that  a  new  business  experiment  like  Indus- 
trial insurance  was  not  likely  to  escape  bitter  antagonism  and 
some  decided  opposition.  Naturally,  dissatisfied  policy-holders 
and  especially  dissatisfied  agents,  as  well  as  others  opposed  to  the 
extension  of  Industrial  insurance  principles,  were  only  too  ready 
to  supply  newspapers  with  information  or  expressions  of  opinion 
adverse  to  the  business,  and  among  the  first  to  give  space  to  an 
open  attack,  with  special  reference  to  the  lapse  and  expense-rates, 
was  the  Philadelphia  Sunday  Times,  which,  under  date  of  June 
26,  1 88 1,  contained  a  lengthy  discussion  of  some  phases  of  Indus- 
trial insurance,  which  were  ably  answered  in  an  article  in  the 
Weekly  Underwriter  of  September  17,  1881,  as  follows: — 

Whether  or  not  so-called  "Industrial"  insurance  will  secure  a  per- 
manent foothold  in  the  United  States  we  regard  as  not  yet  settled,  but  we 
should  be  very  sorry  if,  through  the  intemperate  advocacy  of  its  friends, 
or  the  ignorant  assaults  of  its  opponents,  it  failed  to  have  its  chance  of 
success.  We  have  contented  ourselves  with  noting  its  progress,  from  time 
to  time,  with  not  sufficient  knowledge  of  its  internal  workings  to  venture 
to  pronounce  a  verdict  upon  it.  But  there  are  others,  with  even  less 
knowledge  than  we  possess,  who  are  not  so  reticent.  One  of  our  daily 
exchanges  has  condemned  it  for  its  expenses,  and  the  companies  practicing 
it  for  the  gains  made  from  lapses — or,  in  other  words,  for  the  sums  taken 
from  poor  people,  who  get  only  a  few  weeks  or  months  of  temporary  insur- 
ance for  their  money.  The  mistake  must  not  be  made  of  measuring  the 
business  in  these  two  respects  by  the  conditions  which  attach  to  ordinary 
life  insurance.  Industrial  premiums  are  very  properly  loaded  much 
heavier,  and  a  business  of  thirty  per  cent,  loading  is  no  criterion  for  one 
of  one  hundred  per  cent.  Nor  are  the  lapses  of  a  business  among  merchants, 
lawyers,  ministers,  etc.,  a  proper  standard  for  lapses  among  working 
people  subject  to  every  rise  and  fall  of  trade  and  everything  affecting  day 
wages.  As  a  matter  of  fact,  the  lapses  in  this  business  are  far  more  Likely 
to  ruin  the  companies  than  the  assured,  and  the  enormous  expenses  are 
inseparable  from  a  business  which  consists  of  house-to-house  collection  of 
nickels,  and  which  is  being  rapidly  extended.  Our  own  fear  has  been,  not 
that  the  poor  people  who  pay  the  nickels  would  suffer,  but  that  the  com- 
panies engaged  in  an  endeavor  to  collect  them  would  endanger  their 
capital.  Every  policy  that  lapses  must  be  a  loss  to  the  company,  and  with 
an  industrial  class  as  shifting  as  is  our  own  there  must  be  many  lapses. 
The  problem  for  the  underwriter  who  will  be  successful  in  industrial  insur- 
ance is,  it  seems  to  us,  to  secure  persistence  in  paying  by  the  assured.  That 
done,  the  way  is  easy.  But  a  company  only  retaining  at  the  close  of  the 


142  HISTORY   OF  THE   PRUDENTIAL. 

year  a  little  more  than  one-half  of  the  business  of  the  year,  can  not  be  said 
to  have  solved  it.  Yet  the  Prudential  of  I/ondon,  with  eight  millions  of 
annual  income,  ample  accumulations  and  a  sufficient  surplus,  represents, 
in  its  five  millions  of  present  members,  but  one  policy-holder  retained  for 
every  three  that  have  lapsed.  Either  the  machinery  is  defective  or  there 
may  be,  in  the  nature  of  the  people  or  their  business,  something  which 
will  necessitate  still  larger  premiums  than  are  now  charged.  If  the  trouble 
is  in  the  machinery,  the  managers  now  in  charge  of  the  business  will 
remedy  it  without  unnecessary  delay  ;  if  it  is  in  the  people,  they  will 
probably  sacrifice  some  capital  before  it  is  remedied.  At  any  rate,  we 
believe  in  giving  them  a  fair  chance  to  work  out  their  problem,  undeterred 
by  fulsome  flattery  or  ignorant  criticism.  The  result  is  worth  attaining \ 
and  we  have  no  doubt  the  means  to  attain  it  will  be  found. 


There  is  in  this  article  the  same  clear  conception  of  the  busi- 
ness as  brought  out  in  Mr.  Dry  den's  letter  on  the  same  subject 
in  the  Spectator  of  September  ist.  I  have  given  space  to  these 
expressions  of  opinion  on  the  part  of  qualified  writers  so  as  to 
bring  out  as  clearly  as  possible  the  views  of  the  companies 
engaged  in  the  business.  On  the  question  of  lapses  the  last  word 
has  not  as  yet  been  said,  and,  in  fact,  few  arguments  worthy  of 
the  name  have  found  their  way  into  public  prints  outside  of  the 
insurance  publications.  A  moment's  reflection  will  make  it  clear 
that  many  of  the  millions  of  so-called  insurance  represent  only  a 
bookkeeper's  statement  of  business  on  which  little  or  nothing  had 
been  paid,  and,  rather  than  being  a  gain  to  the  company,  indicate 
a  serious  loss  and  a  material  hindrance  to  the  largest  possible 
development  of  Industrial  insurance. 

By  December  31,  1881,  The  Prudential  had  increased  its 
business  to  133,582  policies  for  the  aggregate  sum  of  $10,959,948. 
The  four  companies  now  transacting  the  business  had,  in  the 
aggregate,  367,473  policies  in  force.  One  company,  the  Provident 
Savings,  discontinued  the  writing  of  new  Industrial  business 
during  the  year,  and  no  longer  makes  returns  in  its  annual 
reports  of  the  Industrial  business  in  force.  Of  the  total  business 
of  The  Prudential  56.5  per  cent,  was  in  force  in  the  State  of  New 
Jersey,  24.0  per  cent,  in  the  State  of  New  York,  while  19.5  per 
cent,  was  in  force  in  other  States,  largely  in  Pennsylvania. 

Referring  to  the  extension  of  the  business  of  The  Prudential 
to  the  city  of  Paterson,  the  Paterson  Press  of  April  22,  1882, 
expressed  itself  emphatically  on  the  subject  of  Industrial  insur- 
ance, and  concluded  an  article  of  a  column  and  a  half  as  follows  : 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l88l-'84.      143 

* '  We  strongly  recommend  recourse  to  this  excellent  system  of 
insurance  by  every  person  of  moderate  means,  for  with  such  a 
plan  there  is  really  no  excuse  for  any  person  not  maintaining  his 
independence ;  providing  out  of  his  own  resources  for  a  proper 
interment  at  death,  for  the  payment  of  debts  he  may  owe,  for 
leaving  to  his  survivors  something  to  take  the  place  at  least 
temporarily  of  a  productive  life,  for  defraying  those  expenses 
which  attend  sickness  and  death  of  any  member  of  the  family — 
expenses  which,  at  one  time  or  another,  are  absolutely  certain  to 
come  to  all."  In  the  words  of  the  Trenton  True  American, 
' '  The  press  in  all  the  principal  cities  of  this  country ' '  were 
"  emphatic  in  their  commendation  of  the  plan." 

Among  other  elements  of  the  population  the  Germans  had, 
from  the  beginning,  been  extensive  patrons  of  Industrial  insur- 
ance ;  naturally  of  a  thrifty  disposition,  they  had  readily  availed 
themselves  of  this  form  of  providing  for  contingencies,  and,  in 
response  to  a  distinct  demand,  The  Prudential,  as  far  back  as  1876, 
had  issued  special  explanations  in  German,  and  supplied  its 
agents  with  applications  in  the  German  language,  tending  to 
make  the  aims  and  objects  of  Industrial  insurance  more  easily 
understood.  Hence  the  attitude  of  the  German  press,  in  a  manner 
most  critical  of  all  social  institutions  and  forms  of  saving  and 
investment  of  non- German  origin,  seems  of  sufficient  interest  to 
warrant  a  quotation  from  the  Carlstadt  Freie  Presse,  under  date 
of  July  i,  1882,  in  a  free  translation  as  follows  : — 

We  have  an  overabundance  of  all  sorts  of  sick-relief  and  aid  associa- 
tions, but  neither  one  form  nor  another  offers  that  degree  of  absolute 
security  which  is  necessary  for  the  working  population  in  case  of  need. 
The  confidence  of  the  public  in  these  forms  of  co-operative  or  fraternal 
associations,  in  consequence  of  the  bitter  experience  in  our  own  village, 
has  been  so  shaken  and  disturbed  that  we  welcome  the  work  of  a  company 
like  The  Prudential,  which  does  away  with  the  most  serious  objections 
made  against  the  former  type  of  burial  or  sickness  associations. 

Naturally,  such  emphatic  approval  as  this,  founded  on  sub- 
stantial reasons,  must  needs  have  done  much  to  influence  the 
German  population  in  becoming,  in  increasing  numbers,  the 
patrons  of  the  Industrial  system  of  The  Prudential,  and  at  the 
present  time  the  Germans  stand  third  in  rank  of  nationalities 
which  patronize  the  Industrial  business  of  The  Prudential. 


144  HISTORY   OF  THE   PRUDENTIAL. 

That  public  approval  was  not  confined  to  the  secular  press  is 
illustrated  by  the  following  extract  from  Our  Church  Paper, 
devoted  to  Christian  interests  as  viewed  by  the  Congregationalists 
of  Newark,  in  its  issue  for  April,  1882  : — 

The  Prudential  Insurance  Company,  of  this  city,  has  had  a  history  in 
some  respects  phenomenal.  The  Company  is  only  six  years  old,  yet  it  has 
issued  over  300,000  policies  and  paid  more  than  4,000  death  claims.  It 
issues  burial-fund  policies  upon  the  weekly-premium  plan,  the  premiums 
being  collected  weekly  by  agents,  at  tfie  residences  of  the  assured.  This 
institution  is  not  organized  as  a  benevolent  society,  but  it  would  be  hard  to 
fond  an  association  doing  a  work  of  greater  good. 

And  in  the  same  publication,  under  date  of  May,  1882,  oc- 
curred a  further  endorsement  of  the  plan  of  The  Prudential, 
which  also  seems  worthy  of  a  place  in  this  summary  of  public 
opinion  on  the  work  of  The  Prudential  at  this  early  period  of  its 
history  : — 

If  ever  a  company  was  started  which  deserved  the  sympathy  and  co- 
operation especially  of  the  working  classes,  it  is  The  Prudential.  Almost 
alone,  with  a  reasonable  prospect  of  success,  has  it  undertaken  the  solution 
of  the  great  insurance  problem  of  the  day,  how  to  provide  a  life-insurance 
company  for  those  of  moderate  means  which  shall  be  deserving  of  the 
name.  In  the  face  of  obstacles  of  no  ordinary  character,  it  has  made 
astounding  progress  and  secured  a  magnificent  clientage. 

The  concensus  of  public  opinion  was,  however,  most  clearly 
expressed  in  a  quotation  in  the  Newark  Register of  January,  1882, 
namely,  that  ' '  The  Prudential  Insurance  Company,  of  Newark, 
is  emphatically  the  poor  man's  best  and  most  reliable  friend '." 

New  problems  and  questions  of  practice  were  constant!}' 
arising  which  demanded  the  most  careful  consideration.  The 
business  was  new,  and  much  was  expected  of  it  which  was  not 
warranted  by  the  plain  policy  contract  between  the  insured  and 
the  companies.  The  notion  still  remained  with  many  that  life 
insurance  was  more  of  a  charity  than  a  business,  and  many 
writers  on  the  subject  of  insurance  still  speak  of  it  as  a  benevo- 
lence, when  it  is  purely  a  matter  of  contract  and  of  business. 
Fortunately,  as  I  have  had  occasion  to  point  out  more  than  once, 
Mr.  Dryden  had  early  recognized  the  practical  difficulties  and  dealt 
with  them  in  a  manner  satisfactory  to  the  policy-holders.  Mr. 
Noah  F.  Blanchard,  who  had  been  President  of  The  Prudential 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l88l-'84.      145 

from  May,  1879,  died  on  May  u,  1881,  and  on  the  23rd  of  the 
same  month  Mr.  Dryden  was  elected  President  of  the  Company. 
In  reference  to  Mr.  Dry  den's  election,  the  Spectator  of  June  2,  1881  > 
properly  said  that  ' '  If  the  growth  of  The  Prudential  is  due  in  any 
important  part  to  the  individual  efforts  of  one  man,  that  man  is 
John  F.  Dryden,  and  the  Board  of  Directors  pays  him  a  deserved 
compliment  in  giving  him  the  Presidency."  Of  Mr.  Blanchard 
the  Spectator  of  May,  1881,  stated  that  "Throughout  his  life  he 
had  been  a  man  of  great  activity  and  excellent  health,  identified 
with  The  Prudential  from  its  inception  and  always  manifesting  a 
lively  interest  in  its  progress.  His  management  of  The  Prudential 
with  Secretary  John  F.  Dryden  was  a  great  success,  during  his 
administration  the  Company  having  achieved  in  large  part  the 
good  reputation  it  now  bears. ' ' 

During  the  early  part  of  1882  The  Prudential  had  been  made 
the  object  of  an  attack  in  the  newspapers  on  account  of  the  sale 
of  stock  by  a  number  of  the  stockholders,  who,  110  doubt,  were 
dissatisfied  with  the  small  returns  which  had  thus  far  been  real- 
ized. Certain  unscrupulous  parties,  endeavoring  to  injure  the 
reputation  of  the  Company,  had  caused  sensational  reports  to  be 
circulated  in  the  newspapers,  and  I  can  not  do  better  than  quote 
an  article  on  the  subject  from  the  January  number  of  the  Spectator 
for  1882,  which  fairly  explains  itself  : — 

On  Saturday  morning,  the  3ist  ultimo,  an  article  appeared  in  the  New 
York  Star,  in  which  an  attempt  was  made  to  throw  discredit  upon  The 
Prudential,  of  Newark,  by  making  it  appear  that  a  number  of  stockholders 
and  directors  were  dissatisfied  with  the  management  of  the  Company,  and 
had  for  that  reason  sold  their  stock.  On  the  evening  previous  an  attempt 
was  made  to  smuggle  the  same  article  into  all  the  New  York  dailies,  but 
none  except  the  Star  noticed  it.  The  Star  at  once  had  the  subject  investi- 
gated, and  in  its  next  issue  did  all  it  could  to  repair  the  injury  by  contra- 
dicting the  whole  substance  of  the  previous  article.  The  animus  of  this 
disgraceful  trick  is  obvious,  and  taken  in  connection  with  the  fact  that, 
starting  less  than  six  years  ago,  the  Company  has  built  up  a  business  upon 
which  the  annual  premium  income  is  more  than  $400,000 — the  largest  of 
any  company  in  New  Jersey,  except  the  Mutual  Benefit  Life — its  utter 
senselessness  is  manifest.  We  have  heretofore  spoken  in  strong  terms  of 
such  methods  by  rival  companies  and  their  agents.  Allan  Bassett,  who  is 
prominently  referred  to  in  the  article  in  question  as  the  former  president, 
was  forced  to  resign  that  position  by  the  Board  of  Directors,  in  May,  1879. 
For  a  time  thereafter  he  was  the  agent  of  the  New  York  Life,  at  Newark, 
but  quite  recently  resigned  to  become  the  agent  of  a  competing  company 
in  the  special  feature  of  industrial  insurance  there.  He  signalized  this 


146  HISTORY  OF  THE   PRUDENTIAL. 

change  by  publishing  a  card  in  which  an  attempt  was  made  to  make  it 
appear  that  he  had  just  resigned  the  presidency  of  The  Prudential  to  be- 
come an  agent  for  an  older  and  stronger  company.  This  attempt  utterly 
failed,  and  the  present  exploit  is  only  another  attempt  in  the  same  direc- 
tion, equally  silly. 

The  Prudential  is  a  vigorous,  sound,  ably-managed  company,  justly 
entitled  to  the  fullest  confidence  of  the  public,  and  that  the  sales  of  stock 
arose  from  no  doubt  of  this  is  clearly  shown  by  the  following  certificate  of 
the  gentlemen  who  sold  a  part  or  the  whole  of  their  stock  : — 

NEWARK,  N.  J.,  January  3,  1882. 

The  undersigned,  having  recently  sold  stock  of  The  Prudential  Insurance 
Company,  hereby  certify  that  such  sales  were  entirely  business  transactions, 
and  should  not  be  construed  as  evidence  of  our  lack  of  confidence  in  the 
solvency  of  the  Company.  We  believe  the  Company  is  sound  and  worthy 
of  the  confidence  of  the  public. 

T.  B.  MANDEVILLE,          WILLIAM  H.  MURPHY, 

9,0  Broad  Street;      FRANKLIN  MURPHY, 

BENJAMIN  ATHA,  WILLIAM  WHITTY, 

JAMES  G.  BARNET,  E.  A.  WILKINSON. 

Continuing,  the  Spectator  said  : — 

The  Prudential  is  doing  a  splendid  work.  It  was  the  first  Company  to 
bring  the  benefits  of  life  insurance  within  the  reach  of  our  working  classes 
upon  the  English  plan  of  weekly  payments  made  directly  to  the  company. 
There  had  been  other  attempts  to  do  something  in  this  direction  through 
the  cumbrous  and  objectionable  machinery  of  the  "  Hildise  Bund  "  or  other 
societies,  through  which  policies  were  issued  to  the  members  upon  quar- 
terly payments,  but  they  utterly  failed,  and  it  remained  for  The  Prudential 
to  solve  the  problem  of  insurance  for  the  working  poor,  which  it  has  done 
with  astonishing  success,  and  all  attempts  to  throw  discredit  upon  it  or 
its  management  deserve  the  contempt  of  all  right-thinking  men.  The 
field  is  large  enough  for  all,  and  therefore  any  competing  company,  if 
self-respecting,  should  refrain  from  assaults  which  can  not  injure  The 
Prudential  as  much  as  they  hinder  the  growth  of  the  business  in  the  estima- 
tion of  the  public. 

The  year  1882  had  been  full  of  new  problems,  and  the  strug- 
gle for  success  had  been  intensified  by  a  most  unfortunate  devel- 
opment of  an  unfair  competition  and  inter-company  warfare. 
The  business  of  the  Company  had  increased  to  196,007  policies  in 
force  for  an  aggregate  sum  of  $15,738,973,  and  the  corresponding 
growth  of  other  Industrial  companies  had  been  such  that  the 
total  number  of  Industrial  policies  in  force  in  the  United  States 


rtnm 


HOMB    OFFICE    OF 

THE;  PRUDE;NTIAIV  INSURANCE;  COMPANY  OF  AMERICA, 
1883-1892. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  1881-^84.      147 

now  exceeded  half  a  million,  being  587,875  policies  for  $56,374,710 
of  insurance. 

Public  approval  of  the  new  form  of  insurance  continued,  and 
from  many  sources  there  is  evidence  of  an  increasing  respect  for, 
and  kindly  interest  in,  the  work  of  The  Prudential.  Among 
others,  the  Insurance  and  Commercial  Magazine,  in  its  issue  of 
December  31,  1883,  referred  to  the  subject  of  Industrial  insurance 
in  the  following  language  : — 

Of  all  things  poor  people  desire  to  avoid,  is  a  "  charity  "  burial  of  one 
of  their  children. 

By  Industrial  Life  Insurance,  as  one  of  the  Commissioners  of  Insur- 
ance truly  said,  children  are  insured  for  a  premium  of  five  cents  a  week, 
for  an  amount  that  provides  a  fair  burial  fund,  payable  immediately  after 
death  is  reported,  when  of  all  times  most  needed. 

At  this  time,  when  the  usual  small  weekly  income  is  interrupted  or 
used  up  for  medical  expenses,  the  little  insurance  money  conies  in  as  a 
sort  of  God-sent  blessing  to  the  poor,  stricken  family. 

The  amount  to  be  realized,  forty  or  fifty  dollars,  is  too  small  to  tempt 
infanticide  or  criminal  practice,  and  never  has,  even  in  England,  where  so 
extensively  practiced  ;  and  the  little  weekly  premiums  are  not  missed  from 
the  small  weekly  income. 

The  tendency  of  Industrial  insurance  is  only  good,  and  in  England, 
where  so  extensively  practiced  for  the  last  thirty  years,  commands  the 
uniform  praise  of  the  press,  the  pulpit,  and  the  informed  public. 

We  understand  there  are  over  seven  million  families  interested  in  it 
in  England,  and  we  see  no  reason  why  a  like  number  should  not  become 
directly  connected  with  it  in  this  country. 

The  growth  of  the  Company  had  been  such  that  during  the 
year  it  became  necessary  to  once  more  remove  the  offices,  and  on 
April  i,  1883,  the  home  office  was  removed  to  the  Jube  Building, 
878-880  Broad  street,  Newark.  This  building  was  occupied  by 
the  Company  for  a  number  of  years,  when  increasing  growth  and 
development  made  another  and  still  more  important  removal 
necessary,  to  which  reference  will  be  made  further  on. 

The  effect  of  the  business,  which  was  now  sufficiently  well 
established,  made  itself  felt  in  other  directions,  and  public  atten- 
tion was  drawn  to  the  matter  in  an  article  in  the  Newark  Daily 
Journal,  January  19,  1883,  in  which  it  was  stated  that  "The 
beneficial  effects  of  this  system  of  insurance  are  well  known. 
Since  The  Prudential  has  been  in  operation  the  proportionate 
number  of  burials  at  the  expense  of  the  city  has  been  very  ma- 
terially lessened,  and  the  Overseer  of  the  Poor  and  undertakers 


148  HISTORY  OF  THE   PRUDENTIAL. 

will  testify  to  this.  People  who  before  had  no  means  to  bury 
their  dead  now  find  it  in  the  comfortable  sums  provided  by  their 
small  weekly  payments  as  premiums  on  policies  in  The  Prudential. 
A  policy  in  The  Prudential  is  an  absolute  safeguard  against  a  pau- 
per's  burial,  and  the  amount  obtained  often  bridges  over  for  a 
considerable  period  the  chasm  of  necessity  caused  by  the  death  of 
any  member  of  the  family. ' ' 

This  emphatic  statement  of  the  direct  relation  of  Industrial 
insurance  to  public  welfare  was  "further  supported  by  the  pub- 
lished returns  of  pauper  funerals  and  general  pauperism  in  the 
city  of  Newark,  which  indicated  a  very  material  reduction  in  both 
items  of  public  expenditure  since  the  introduction  of  the  system 
of  family  insurance. 

Additional  proof  of  the  value  of  Industrial  insurance  as  a 
method  of  teaching  the  habits  of  thrift  in  other  directions  is 
found  in  the  statement  of  an  Industrial  agent  in  The  Chronicle, 
a  New  York  insurance  publication,  under  date  of  November  15, 
1883  :  (<  I  soon  found  that  my  premium  increase  would  be  small 
unless  I  was  able  to  teach  the  poor  people  thrift,  and  I  often  had 
to  instruct  them  in  the  matter  of  saving  the  pence  until  I  called, 
in  order  to  keep  the  policy  in  force,  and  also  to  teach  the  better- 
to-do  classes  how  to  secure  the  benefits  offered  them  for  their 
small  weekly  pence. ' ' 

This  view  of  the  mission  of  the  Industrial  agent  pre- 
vails extensively  among  the  industrial  population.  It  is  not 
too  much  to  say  that  the  Prudential  agent  is,  in  the  majority 
of  instances,  the  true  friend  of  those  with  whom  he  comes  in 
contact.  Few  men  more  thoroughly  learn  to  understand  the 
ways  and  means  of  the  wage-earning  population,  and  few  have 
better  opportunities  to  extend  the  teachings  of  the  gospel  of 
thrift  to  those  who  need  it  most  for  the  improvement  of  their 
social  and  economic  conditions.  Teaching  the  people  thrift  in  one 
direction  has  been  accepted,  by  many  who  have  studied  the 
subject,  as  equivalent  to  the  teaching  of  thrift  habits  in  other  direc- 
tions, and  those  who,  through  the  Prudential  agent,  receive  their 
first  instruction  and  encouragement  in  the  direction  of  systematic 
saving  must  needs,  in  the  course  of  the  years,  become  better  citi- 
zens, better  producers  and  better  off  in  material  good  things  in 
consequence  of  their  relationship  to  an  Industrial  insurance  com- 
pany. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l88l->84.      149 

As  a  rule,  exceptional  caution  had  been  used  in  selecting 
men  for  the  position  of  Industrial  agents.  Security  for  the 
faithful  discharge  of  their  duties  was  required,  and  inquiry  was 
invariably  made  of  applicants  for  positions  as  to  past  records 
in  former  employments.  Still,  it  is  perfectly  natural  that  occa- 
sionally, or  even  frequently,  unworthy  men  would  succeed  in 
securing  positions  which,  for  self-evident  reasons,  offered  many 
opportunities  for  dishonesty  and  fraud.  The  Prudential  had 
always  dealt  severely  with  men  of  this  class,  and  had  never  hesi- 
tated to  institute  criminal  prosecution  for  larceny  or  fraud.  The 
handling  of  small  sums  of  money  incident  to  the  conduct  of  the 
business  was  naturally  an  exceedingly  difficult  matter  to  manage, 
and  Industrial  insurance  companies  had  found  it  necessary  to 
make  examples  of  agents  detected  in  obtaining  fraudulent  com- 
missions or  appropriating  premiums  to  their  own  use.  Once 
discharged,  such  agents  would  often  connect  themselves  with 
other  insurance  organizations,  usually  bogus  sick-benefit  societies 
or  so-called  insurance  associations.  In  other  instances  they  would 
become  connected  with  newspapers  as  reporters,  and  furnish  all 
sorts  of  sensational  matter  founded  on  isolated  instances,  or  on 
pure  imagination.  One  of  the  methods  was  to  send  anony- 
mous communications  to  newspapers,  containing  charges  against 
the  companies,  among  others  the  intimation  that  children 
were  insured  for  the  purpose  of  realizing  improperly  at  their 
death. 

The  Pittsburg  Dispatch  of  April  n,  1883,  contained  reference 
to  such  a  letter,  but  in  explanation  the  paper  stated  that,  ' '  For  the 
information  of  the  author  of  the  letter  referred  to,  it  may  be  said 
that  the  companies  thus  engaged  are  recognized  in  the  commercial 
and  insurance  world  as  both  substantial  and  legitimate,  and  such 
men  as  ex- Postmaster- General  James  and  others  are  interested 
in  them.  They  issue  no  policies  on  lives  of  infants  under  one 
year  of  age.  The  highest  policy  issued  on  children  under  six  is 
$60,  and  under  eleven  $123." 

The  subject  of  life  insurance  for  children  had  by  this  time 
attracted  attention  in  other  parts  of  the  country,  and,  among 
others,  General  Butler,  in  an  address  made  at  Spencer,  Mass., 
during  the  latter  part  of  1883,  as  candidate  for  the  Governorship 
of  the  State,  made  a  bitter  attack  on  Industrial  insurance  and 
many  other  forms  of  life  insurance.  The  subject  was  discussed 


150  HISTORY  OF  THE   PRUDENTIAL. 

in  an  article  in  the  Weekly  Underwriter*  in  which  the  errors 
of  Governor  Butler  were  set  forth,  making  clear  his  absolute 
ignorance  of  the  business  and  his  self-evident  perversion  of  the 
facts,  the  article  concluding  with  the  statement  that  "If  he  had 
made  the  speech  in  Boston  a  large  number  of  his  hearers  could 
have  told  him  that  companies  do  not  charge  twenty-five  cents 
a  week  for  infantile  insurance,  and  that  they  do  not  take  a 
premium  above  five  cents  a  week,  and  do  not  insure  children  for 
any  larger  sums  than  $100.  They  give  no  insurance  at  all  for 
three  months  after  the  issue  of  the  policy,  and  for  the  balance 
of  the  year  from  Jio  to  $14  in  case  of  death.  It  may  be  that 
there  are  among  Mr.  Butler's  constituents  men  who  would 
murder  a  baby  one  year  old  for  $10,  but  we  do  not  believe  it ; 
and  so  far  from  its  being  a  fact  that  fathers  in  England  have  over 
and  over  again  murdered  their  children,  there  has  never  been  an 
authenticated  case  of  the  kind. ' ' 

The  views  of  the  Governor  were  also  further  referred  to  in 
the  Standard  of  November  3,  1883,  a  Boston  insurance  publica- 
tion ,  the  article  concluding  with  the  statement  that  '  *  Governor 
Butler  is  lawyer  enough  to  know  that  assertion  is  a  good  way  from 
truth,  and  that  impressions  can  never  be  substituted  for  facts. 
It  is  charitable  to  believe  that  he  has  gotten  the  impression  in 
some  way  that  this  thing  is  done  in  England,  but  it  would  be 
well,  before  he  makes  such  bold  statements  to  the  citizens  of 
Massachusetts,  for  him  to  find  one  well-authenticated  case  of  such 
a  murder. ' ' 

The  unfortunate  aspect  of  the  affair  was  the  newspaper 
notoriety  given  to  the  business,  and  the  influence  such  remarks 
naturally  had  on  public  opinion,  especially  among  a  class  of  people 
utterly  unfamiliar  with  the  practice  of  Industrial  insurance,  and 
on  account  of  their  wealth  and  social  position,  ignorant  of  the 
actual  manners  and  morals  of  the  industrial  population.  It  has 
remained  so  to  the  present  time,  and  the  opposition  to  the  business 
is  to  be  found  among  the  rich  and  well-to-do,  or  those  otherwise 
out  of  touch  with  the  working  people  ;  and  while  millions  of 
Industrial  policies  on  children's  lives  are  held  to-day  by 
working  people  and  others,  this  fact  has  never  had  the  slightest 
influence  on  the  opinion  of  those  who  are  opposed  to  this  form  of 

*  Vol.  29,  p.  229. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l88l-'84.       151 

insurance.*  As  has  previously  been  stated,  from  the  very  begin- 
ning The  Prudential  had  carefully  observed  its  experience  on 
infantile  lives,  and  no  case  of  even  abuse  or  indifference  had  come 
to  the  notice  of  the  Company,  to  say  nothing  of  an  authentic  case 
of  the  murder  of  a  child  for  insurance  money  ;  nor  is  there  such 
a  case  on  record  to  this  day,  although  millions  of  children  have 
been  insured  for  many  years  in  the  United  States. 

Industrial  insurance  had  continued  to  make  considerable  prog- 
ress during  the  year,  and  by  December  31,  1883,  The  Prudential 
had  273,917  Industrial  policies  in  force,  for  the  sum  of  $23,053,935 
of  insurance  protection.  The  aggregate  number  of  Industrial  pol- 
icies in  the  United  States  now  exceeded  877,000,  while  the  total 
amount  of  Industrial  insurance  in  force  was  almost  $88,000,000. 
The  business  could  now  be  considered  completely  established, 
and  the  question  of  ultimate  success  was  now  no  longer  open  to 
a  doubt. 

The  subject  was  referred  to  in  the  New  York  "  Insurance 
Report  for  1884,"  as  follows  : — 

The  rapid  growth  of  industrial  insurance  indicates  that  the  advantages 
it  offers  are  being  presented  with  characteristic  energy  by  the  companies 
that  are  making  it  a  specialty.  The  subject  presents  for  serious  considera- 
tion several  phases  that  are  important,  both  in  the  protection  afforded  the 
policy-holders  and  the  probable  result  of  the  efforts  to  establish  the  success 
of  the  undertaking.  The  reserve  to  be  charged  has  been  the  subject  of 
discussion  by  actuaries  and  at  several  conventions  of  State  Insurance 
officials.  A  plan  was  agreed  upon,  and  has  been  observed  with  but  slight 
modification  for  the  past  three  years.  It  is  admitted  that  the  large  number 
of  lapses  and  the  great  expense  of  obtaining  and  retaining  the  business 
are  elements  that  do  not  enter  into  Ordinary  life  insurance  transactions. 
In  fact  there  is  no  precedent  to  guide  the  companies.  The  operations  of 
the  Prudential,  of  London,  are  familiar,  it  is  true,  yet  the  State  control 


*  This  also  holds  largely  true  of  charitable  and  reformatory  or  correc- 
tional societies,  of  which  it  has  well  been  said,  in  a  report  on  The 
Unemployed  in  Massachusetts,  that  "The  ordinary  charitable  institution 
as  now  constituted  is  not  in  touch  with  the  industrial  conditions.  Such 
societies  are  organized  for  the  relief  of  pauperism.  They  are  so  well 
accustomed  to  deal  with  the  degraded  or  particularly  unfortunate  class 
that  they  necessarily  lose  a  certain  sort  of  tact  and  generous  discrimination 
which  is  needed  in  dealing  with  men  and  women  who,  under  ordinary 
conditions,  are  steady  wage- earners." 

(Final  report  on  the  Unemployed.  House  Dpcument  No.  50,  p.  xiv. 
Boston,  1895.) 


153  HISTORY   OF  THE   PRUDENTIAL. 

surrounding  the  American  companies  restrains  them  to  certain  methods 
that  are  diametrically  the  opposite  of  the  freedom  and  judgment  that  have 
permitted  and  fostered  the  great  success  of  the  foreign  company.  It  may 
be  assumed,  therefore,  that  the  superintendent  will  use  the  widest  latitude 
of  discretion  consistent  with  safety  in  building  up  and  encouraging  this 
plan  for  family  insurance.  It  is  a  work  of  supererogation  to  refer  in  detail 
to  the  benefits  conferred  by  the  London  company  on  the  industrial  classes 
of  Great  Britain,  where  its  policy-holders  number  one-seventh  of  the  popu- 
lation ;  there  is  equal  promise  of  benefit  and  success  in  the  United  States. 
The  time  for  experimenting,  it  is  true,  has  not  passed,  and  there  must  be 
to  some  extent  a  different  procedure  in  securing  business  compared  with 
the  operations  in  London.  It  is  evident,  however,  that  many  points  have 
been  obtained  by  our  companies  from  the  foreign  office,  and  supplemented 
successfully  by  the  intuitiveness  that  discerns  the  faults  and  creates  their 
remedies.  The  companies  prosecuting  the  business  in  this  State  have  in 
five  years  procured  a  membership  equal  to  that  of  the  [British]  Prudential 
when  it  had  twenty-eight  years'  experience.  What  can  be  prophesied  of 
their  future?  The  details  connected  with  the  collection  of  the  weekly 
premiums  and  the  verification  of  the  work  of  the  collectors  are  provided  for 
and  guided  by  a  well-nigh  perfect  system.  The  increase  each  year  in  the 
number  of  people  employed  by  the  companies  in  their  outside  work  indi- 
cates the  popularity  of  the  business.  There  is  not  recalled  a  single  com- 
plaint made  of  any  of  the  companies  during  the  year,  and,  with  a  constitu- 
ency in  this  State  that  is  quite  formidable  and  growing  daily,  this  fact  is 
remarkable. 


It  is  significant  to  note,  in  this  reference  to  the  business,  the 
statement  on  the  part  of  the  Insurance  Superintendent,  that 
' '  There  is  not  recalled  a  single  complaint  made  of  any  of  the 
companies  during  the  year,  and,  with  a  constituency  in  this  State 
that  is  quite  formidable  and  growing  daily,  this  fact  is  remark- 
able. ' '  To  those  familiar  with  the  manner  in  which  the  business 
had  been  managed,  and  with  the  prudent  and  conservative 
methods  which  had  been  employed  in  extending  the  business, 
the  fact  referred  to  was  not  remarkable,  for  special  efforts  had 
been  made  to  give  complete  satisfaction  to  those  most  vitally 
interested  in  the  business — that  is,  the  Industrial  policy-holders. 

The  New  York  Tribune,  also,  in  an  article  on  Industrial 
insurance,  dated  July  10,  1884,  concluded  with  the  statement 
that  "Some  sentimental  objections  have  been  raised  against 
Industrial  insurance.  The  most  serious  charges  are  that  it  is 
used  speculatively  and  induces  infanticide.  These  objections  are 
fully  disposed  of  by  the  fact  that  actual  experience  proves  them 
to  be  groundless. ' ' 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l88l-'84.       153 

The  charge  of  child-murder,  for  the  purpose  of  obtaining  the 
small  amount  of  insurance  to  be  realized  at  the  death  of  the  child, 
hardly  received  serious  attention  at  this  early  period.  The  quota- 
tion from  the  Tribune  and  the  quotation  from  the  Pittsburg 
Dispatch  clearly  indicate  that  the  charge  was  not  considered 
worthy  of  consideration,  but  hostility  to  the  business  manifested 
itself  from  another  direction,  in  an  attempt  made  during  the  early 
part  of  1884,  by  a  negro  member  of  the  legislature  of  Massa- 
chusetts, to  force  companies  to  accept  colored  risks  at  the  same 
rates  as  those  charged  the  white  population.  As  has  been  pointed 
out,  this  method  of  discrimination  was  based  on  a  very  careful 
investigation  of  the  subject,  and  was  fully  supported  by  a  large 
body  of  official  statistics.  It  was  well  said  by  the  Weekly  Under- 
writer, that  if  the  proposed  measure  ' '  does  become  a  law,  its 
success  will  be  due  to  sentimental  consideration  alone. ' ' 

Unfortunately,  such  sentimental  considerations  have  very 
materially  influenced  legislators  at  all  times  and  on  all  subjects, 
and  during  the  next  few  years  laws  were  passed,  in  nearly  all  the 
leading  States,  compelling  Industrial  companies  to  accept  negro 
risks  at  the  same  rates  as  those  charged  the  white  population. 
Fortunately,  the  companies  can  not  be  compelled  to  solicit  this 
class  of  risks,  and  very  little  business  of  this  class  is  now  written 
by  Industrial  companies,  and  practically  none  by  The  Prudential. 
The  Prudential  was  the  first  company  to  discriminate  against 
negroes,  as  stated  in  Mr.  Dryden's  letter  of  March  10,  1881,  and 
in  this  attitude  the  Company  was  fully  supported  by  the  Insurance 
Commissioner  of  Massachusetts,  who,  in  his  report  for  1884,  stated 
that ' '  This  was  not  a  distinction  on  account  of  color,  but  on  account 
of  the  difference  in  longevity  between  the  two  races,  apparently 
supported  by  mortality  statistics.  That  the  distinction  was  dic- 
tated by  race  prejudice  is  not  conceivable.  The  whole  structure 
of  life  insurance  rests  upon  a  calculation  of  the  probabilities  of 
longevity  and  a  just  proportion  of  insurance  charge  to  the  risk 
taken,  and  to  compel  a  company  to  insure  for  the  same  rates  dif- 
ferent classes  of  people  with  different  prospects  of  longevity  would 
be  to  establish  a  grossly  unjust  discrimination  against  the  longer- 
lived  class  in  favor  of  the  shorter-lived  class. ' ' 

The  progress  of  the  Company  during  the  year  1884,  while 
not  as  great  as  during  the  preceding  year,  had  nevertheless  been 
considerable.  The  actual  increase  in  policies  was  50,877  against 


154  HISTORY  OF  THE   PRUDENTIAL. 

77,910  during  the  preceding  year.  The  financial  and  industrial 
depression  of  the  period  1882^-' 86  had  made  itself  felt  in  Indus- 
trial insurance,  as  well  as  in  all  other  business  operations.  The 
business  of  the  Company  had  been  extended  into  new  territory, 
and  offices  had  been  opened  in  the  District  of  Columbia  and 
Baltimore,  Md. 

During  the  early  part  of  the  year,  Dr.  Leslie  D.  Ward,  the 
Medical  Director  of  the  Company,  and  Mr.  Dry  den's  associate  in 
the  founding  of  the  Company,  had  been  elected  Vice- President  in 
place  of  the  Hon.  Henry  J.  Yates,  ex-Mayor  of  Newark,  who  was 
elected  Treasurer  of  the  Company.  As  Medical  Director  Dr.  Ward 
had,  from  the  beginning,  shown  exceptional  executive  skill  and 
ability  in  managing  the  field  operations  of  the  Company,  and  while 
still  occupying  his  former  position,  devoted  himself  with  energy 
to  the  outside  developments  of  the  Company's  interests. 

Dr.  Ward  has  during  late  years  been  the  executive  manager 
of  the  Company's  field  force,  and  it  is  not  too  much  to  say  that 
much  of  the  success  which  the  Company  has  achieved  has  been 
the  result  of  his  exceptional  ability  and  devotion  to  the  interests 
of  the  Company  and  to  the  promotion  of  its  welfare. 

Various  concessions  and  improvements  in  policy  provisions 
were  introduced  at  about  this  time  and  communicated  to  the  field 
force  under  date  of  July  31 ,  1884,  in  the  following  circular  letter  :— 

POLICY  CONDITIONS  AND  CONCESSIONS.     1884. 

First. — All  unnecessary  verbiage  has  been  omitted.  The  contract  is 
plain  and  straightforward,  and  can  be  easily  understood  by  any  one. 

Second. — Every  restriction  upon  residence  or  liberty  to  travel  has  been 
removed. 

Third. — The  insured  may  engage  in  any  occupation  except  military 
or  naval  service  in  time  of  actual  war. 

Fourth. — The  policy  is  incontestable  after  two  years. 

The  above  concessions  will  be  extended  to  all  policies  heretofore 
issued. 

A  change  in  benefits  and  rates  was  made  under  date  of 
October  6,  1884,  when  the  infantile  rates  were  very  slightly 
reduced,  and  immediate  benefits  of  one-quarter  during  the  first 
six  months,  changed  to  no  benefit  during  the  first  three  months, 
one-quarter  benefit  during  the  second  three  months,  and  one-half 
benefit  after  the  policy  had  been  six  months  in  force.  A  new 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  1881-^84.       155 

clause  was  inserted,  by  which  the  Company  assumed  only  one- 
half  liability  of  any  amount  that  might  be  due  in  case  of  death 
from  consumption  during  the  first  policy  year.  A  suicide  clause 
had  been  inserted  in  the  policy,  which  made  the  policy  void  if 
death  from  this  cause  occurred  during  the  first  three  policy 
years.  All  restrictions  as  regards  occupations  were  done  away 
with,  excepting  military  service,  and  an  intemperance  clause  which 
had  been  early  inserted  in  the  policy  was  also  eliminated.  These 
changes  in  method  were  an  indication  of  the  careful  supervision 
of  the  Company's  interests,  aiming  rather  at  full  justice  to  all 
policy-holders  than  undue  liberality  in  the  direction  of  impaired 
lives,  or  an  otherwise  undesirable  class  of  insurance  applicants. 
The  actual  business  operations  during  1884,  as  has  been  stated, 
had,  however,  been  much  hindered  by  the  existing  industrial  de- 
pression, and  it  is  something  very  considerably  to  the  credit  of  the 
Company  and  the  efforts  of  its  managers  that  as  large  an  increase 
as  has  been  referred  to  had  actually  been  made.  The  effect  of 
this  depression  on  the  insurance  business  is  referred  to  in  the 
New  York  "Insurance  Report  for  1885,"  from  which  I  make 
a  brief  quotation  : — 

The  prosecution  of  the  industrial  insurance  business  during  the  year 
has  been  greatly  hampered  by  the  unfortunate  situation  of  the  laboring 
population,  who,  through  a  lack  of  employment  and  because  of  the  numer- 
ous strikes,  have  not  been  in  a  condition,  as  a  rule,  to  procure  this  protec- 
tion for  their  families.  In  the  face  of  these  difficulties  the  companies  have 
been  active  in  their  canvassing  methods,  with  quite  creditable  results.  The 
detail  of  their  transactions  is  enormous,  and  needs  unremitting  attention. 
With  almost  an  army  of  workers  the  opportunities  for  wrong-doing  are 
numerous,  but  the  system  adopted  by  the  several  corporations  serves  to 
prevent  irreparable  injury.  When  the  benefits  and  advantages  to  the 
dependents  of  our  industrial  citizens,  arising  from  membership  in  these 
companies,  are  thoroughly  understood,  the  work  of  the  corporations  will 
be  an  experiment  no  longer,  for  the  protection  thus  guaranteed  will  be 
regarded  as  a  necessity.  The  Superintendent  is  in  hearty  sympathy  with 
this  endeavor,  by  corporate  action,  to  promote  the  welfare  of  our  poorer 
people,  and  he  has  but  encouragement  to  offer  the  promoters  of  the  plan. 

By  December  31,  1884,  The  Prudential  had  secured  for  itself 
an  enviable  position  in  the  world  of  finance  and  insurance.  With 
almost  325,000  policy-holders,  old  and  young,  with  an  aggregate 
insurance  liability  of  $28,545,000,  with  assets  of  $752, 878  and  a 
capital  of  $115,000,  the  Company  could  now  claim  rank  as  one  of 


156  HISTORY   OF  THE   PRUDENTIAL. 

the  leading  insurance  companies  of  the  United  States.  This 
result  had  been  accomplished  in  the  short  space  of  nine  years, — 
nine  years,  however,  of  the  most  determined  struggle  and  effort 
to  make  Industrial  insurance  a  success  in  the  United  States. 

In  commenting  on  the  success  of  The  Prudential  and  the 
annual  balance-sheet  for  the  year  1884,  the  Spectator  referred 
to  The  Prudential  and  its  methods  and  results  in  well-earned 
words  of  praise:  "The  Prudential  was  the  pioneer  industrial 
company,  and  has  educated  the  American  public  to  the  advan- 
tages to  be  derived  from  small  life  or  burial-fund  insurance 
on  the  weekly-payment  plan.  *  *  *  *  The  Prudential  now 
operates  in  a  number  of  States,  over  a  wide  field,  and  by  the 
policy  of  scrutiny  and  good  management  maintained  by  the  offi- 
cers each  department,  per  se,  is  made  to  show  a  profit.  The  closest 
supervision  is  kept  over  the  superintendents,  assistant  superin- 
tendents and  agents,  who  are  summarily  dealt  with  for  grievances 
reported  and  proved  by  policy-holders  ;  but,  on  the  other  hand, 
The  Prudential  bears  a  reputation  for  liberally  treating  its  agents 
and  employees,  and  for  religiously  studying  their  interests. 
*  *  *  *  The  Prudential  is  essentially  the  people's  company, 
furnishing,  as  it  does,  the  facilities  whereby  even  the  poorest 
can  obtain  insurance  to  relieve  their  wants  in  times  of  dire 
necessity. ' '  * 

In  a  brief  sketch  of  the  history  and  progress  of  the  Company, 
in  commemoration  of  the  tenth  anniversary,  published  in  the 
Spectator  during  the  year  1885,  Mr.  Dry  den  contributed  some 
very  interesting  facts  pertaining  to  the  early  history  of  The  Pru- 
dential, most  of  which  have  been  taken  account  of  in  the  earlier 
portion  of  this  work.  Among  other  interesting  facts,  however, 
Mr.  Dryden  stated  that,  on  the  first  of  January,  1885,  the  field 
force  of  The  Prudential  was  estimated  at  1,500,  of  which  34  were 
superintendents,  150  assistant  superintendents  and  1,200  agents, 
the  balance  being  inspectors  and  special  agents.  The  office  force 
consisted  of  55  male  and  64  female  clerks,  besides  the  official  staff. 

It  has  well  been  said  that  success  in  Industrial  insurance 
is  very  largely  a  question  of  supervision  and  attention  to  detail, 
and  it  is  difficult  to  convey  an  accurate  idea  of  the  magnitude  of 
these  transactions  to  those  who  are  not  personally  familiar  with 
the  office  management  of  Industrial  companies.  Everything 

*  The  Spectator,  January,  1885. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l88l-'84.       157 

possible  lias  been  done  to  reduce  clerical  labor,  waste  and  ex- 
penses to  a  minimum  by  method  and  system  and  the  employment 
of  special  counting,  calculating  and  other  machines.  In  many 
of  the  most  important  improvements  in  policy  contracts,  such  as 
the  granting  of  dividends  and  paid-up  policies,  it  has  often  been 
a  most  serious  question  as  to  how  to  provide  for  the  necessary 
clerical  labor  in  a  manner  at  once  efficient  and  yet  economical. 
Having  to  deal  with  millions  of  policy-holders,  the  question  has 
often  been  rather  the  expense  of  the  necessary  office  transactions 
than  the  actual  amount  involved  in  the  payments.  Since  these 
expenses  or  difficulties  are  largely  inherent  in  the  business,  the 
best  talent  and  ability  has  been  devoted  to  the  solving  of  prob- 
lems with  which  Ordinary  life  companies  have  never  been  called 
upon  to  deal. 


158  HISTORY   OF  THE   PRUDENTIAL. 


CHAPTER  X. 

THE   PRUDENTIAL   INSURANCE   COMPANY   OF   AMERICA, 
1885-^888. 

While  the  growth  of  the  Company  had  been  rapid  and  consid- 
erable, only  a  beginning  had  been  made.  New  offices  were  opened 
as  fast  as  the  necessary  agency  and  management  force  could  be 
trained  for  the  positions,  and  the  Company  rapidly  extended  its 
operations  westward,  having  entered  Ohio  first,  and  then,  in  suc- 
cession, all  the  other  States  of  the  Middle  West.  The  first  office 
in  Ohio  was  opened  in  Cleveland,  on  June  29,  1885,  and  very  soon 
other  cities  were  added  to  the  Western  department  of  the  Company's 
business.  From  the  start  The  Prudential  had  held  firmly  to  the 
theory  that  for  permanent  business  progress  it  would  be  better  for 
the  Company  itself  to  develop  an  agency  staff  and  the  necessary 
force  of  district  managers,  than  to  go  outside  of  its  own  office  for 
new  field  material.  Hence  the  Company  made  conservative 
progress,  and  developed  a  force  of  employees  whose  loyalty  can 
not  be  matched  by  any  organization  of  men  in  this  country. 
While  something  was  sacrificed  to  this  policy  of  The  Prudential, 
the  Company  has  never  had  cause  to  regret  its  position  in  this 
matter,  and  is  satisfied  with  the  results. 

The  business  of  Industrial  insurance  continued  to  receive 
considerable  attention  during  the  year,  especially  from  experts 
familiar  with  life-insurance  problems,  and,  among  others,  Mr. 
August  F.  Harvey,  one  of  the  leading  actuaries  of  the  time, 
made  an  investigation  into  the  practice  and  results,  the  conclusion 
arrived  at  being  communicated  to  the  Weekly  Underwriter,  May 
23,  1885,  as  follows  :— 

I  also  made  inquiry  into  some  matters  connected  with  the  industrial 
business.  It  is  comparatively  new  here,  but  the  results  of  the  trial,  so  far, 
favor  its  excellence  and  its  permanency.  The  great  advantage  to  persons 
of  very  limited  means  of  being  able  to  carry  a  moderate  insurance  for  a  low 
weekly  cost,  collected  at  their  homes,  extends  beyond  the  mere  conve- 
nience of  the  matter  to  the  individuals  concerned.  The  system  relieves 
such  beneficiaries  from  their  worst  anxiety — the  dread  of  burials  at  public 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l885~'88.      159 

expense — and  has  actually,  in  many  of  the  more  populous  quarters  of  the 
large  cities,  where  extreme  poverty  prevails,  had  a  marked  influence  in 
the  reduced  number  of  calls  for  aid  in  the  public  press  ;  it  promotes  small 
savings  in  people  of  higher  advantages  and  encourages  a  thrift  among  the 
better  classes  who  patronize  the  Company,  which  has  its  effect  in  the  in- 
crement of  the  public  wealth.  I  inquired  particularly  with  reference  to 
the  public  assertion,  that  the  plan  of  furnishing  insurances  on  infant  lives 
was  to  invite  child-murder,  or  such  neglect  as  to  bring  its  fatal  results 
within  the  category  of  crime.  If  the  statement  is  true  in  any  degree,  the 
foundation  for  it  is  so  limited  that  it  has  not  been  particularly  noticed. 

Mr.  Harvey's  conclusions  were  practically  identical  with 
those  of  Mr.  Thomas  B.  Sprague,  the  President  of  the  Institute 
of  Actuaries  of  Kngland,  who  had  also  extensively  investigated 
the  subject,  and,  as  a  result,  expressed  himself  in  favor  of  the 
business,  stating  that,  from  the  standpoint  of  public  policy,  the 
system  of  Industrial  insurance  was  fully  deserving  of  the  public 
support,  which  had  come  to  it  in  increasing  amount,  as  the 
beneficence  of  the  plan  became  more  widely  known  to  the  indus- 
trial population.  Irrespective  of  these  expressions  of  approval 
and  confidence  on  the  part  of  the  most  competent  actuaries,  The 
Prudential  made  its  own  observations  and  investigations,  and 
continued  to  examine  carefully  its  own  experience  in  every  direc- 
tion, and  on  this  basis  of  fact  and  knowledge  the  Company  rests 
its  side  of  the  argument. 

From  year  to  year  the  business  of  the  Company  had  increased, 
and  at  the  close  of  1885  the  total  number  of  Industrial  policy- 
holders  had  increased  to  422,671.  A  corresponding  increase  had 
been  made  in  the  assets,  which  now  exceeded  $1,000,000,  with  a 
comfortable  surplus  of  $323,037.  With  such  results  obtained 
during  so  short  a  period  as  ten  years,  the  Company  could  well 
afford  to  look  hopefully  into  the  future  and  view,  with  but  a 
small  degree  of  apprehension,  the  frequent  attempts  made  to  dis- 
turb the  progress  of  the  business  by  newspaper  attacks,  unwar- 
ranted and  unfair  competition  and  unwise  legislation,  attempting 
to  interfere  with  the  operations  of  the  Industrial  companies  on 
grounds  of  sentiment  and  prejudice. 

Mention  has  been  made  of  the  passage  of  a  law  in  Massa- 
chusetts, compelling  Industrial  companies  to  grant  equal  benefits 
to  white  and  colored  applicants.  Following  the  Massachusetts 
precedent,  a  similar  bill  was  introduced  by  a  negro  member  into 
the  Rhode  Island  Legislature  during  March,  1886,  which  also 
became  a  law.  The  Prudential  at  this  time  transacted  no  business 


l6o  HISTORY   OF  THE   PRUDENTIAL. 

in  Rhode   Island,   the   Industrial  business  in   that  State  being 
confined  to  the  operations  of  one  or  two  companies. 

In  the  adjoining  State  of  Connecticut,  Industrial  insurance 
seems  to  have  been  further  advanced,  and  considerable  attention 
to  the  subject  is  given  in  the  annual  report  of  the  Insurance 
Commissioner  for  1886.  Considerable  space  was  devoted  to  the 
discussion  of  the  business  in  general,  and  to  the  special  require- 
ments as  regards  the  valuation  of  Industrial  policies.  I  quote 
the  following  remarks  from  Commissioner  Williams' s  report,  as 
illustrating  the  views  of  one  who  had  evidently  made  himself 
thoroughly  familiar  with  the  subject : — 

Four  of  the  twenty-seven  companies  whose  transactions  are  consolidated 
in  the  statistics  already  given  prosecute  chiefly  the  business  known  as  In- 
dustrial insurance.  Policies  average  but  little  more  than  $100  in  amount, 
and  the  premium  is  paid  weekly.  Five  or  ten  cents  a  week,  according  to 
the  age,  will  purchase  an  assurance  of  $100  for  persons  not  past  middle  life, 
and  thus  a  small  provision  for  the  future  is  brought  within  the  reach  of  all 
who  are  insurable.  The  great  body  of  workers  dependent  on  slender  daily 
wages  ought  to  avail  themselves  of  this  plan,  and  not  only  great  private 
but  public  benefit  would  result  therefrom.  The  business  is  new  in  this 
country,  but  is  extending  rapidly. 

To  these  straightforward  words  of  official  approval  of  the 
business  of  Industrial  insurance,  from  the  standpoint  of  public 
policy,  Commissioner  Williams  added  the  further  service  of  a 
special  recommendation  in  reference  to  the  valuation  of  Indus- 
trial policies,  based  on  a  special  report  on  the  subject  made  by 
the  Actuary  of  the  Department,  Mr.  Sprague.  Thus  by  1886 
the  business  had  secured  not  only  further  official  approval,  but 
at  the  same  time  further  official  recognition  as  a  distinct  form  of 
life  insurance,  demanding  separate  consideration  on  account  of 
its  inherent  peculiarities  and  its  essential  difference  from  the 
Ordinary  plan  of  life  insurance.  The  recommendations  were 
accompanied  by  a  valuable  table  of  weekly  annuities  and  assur- 
ances applicable  to  the  Industrial  method  of  insurance  for  persons 
of  all  ages  from  o  to  99. 

The  subject  of  Industrial  insurance  received  additional  con- 
sideration this  year  in  the  annual  report  of  the  Insurance  Com- 
missioner of  Massachusetts,  from  which  I  also  make  a  brief 
abstract : — 

The  term  "industrial"  or  "prudential"  is  employed  to  distinguish  a 
class  of  insurance  for  small  amounts  for  weekly  premiums  of  a  few  cents 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l885-J88.       l6l 

each,  such  as  persons  of  humblest  means,  dependent  upon  the  wages  of 
their  labor  or  other  limited  income,  can  spare  from  their  urgent  necessities. 
The  provision  such  insurance  makes  is  only  for  the  relief  of  immediate 
family  needs  created  by  the  death  of  the  insured,  and  when  effected  on  the 
life  of  an  infant  of  unproductive  age  and  condition  can  properly  provide  for 
little  more  than  decent  burial  charges.  Ordinarily  the  life  of  an  infant  of 
tender  years  can  not  be  deemed  to  have  an  insurable  value,  and  for  a  parent 
to  speculate  a  profit  from  the  death  of  his  offspring  is  repugnant  to  the 
natural  feelings  and  to  public  morals.  But  a  provision  by  insurance  for 
the  cost  of  sacred  decencies  to  the  relics  and  memory  of  the  dead  is  worthy 
and  legitimate. 


The  Massachusetts  Commissioner  also  referred  to  the  fact 
that  the  Germania  L,ife  Insurance  Company  had  discontinued  the 
transaction  of  Industrial  business,  but  had  made  an  equitable 
arrangement  with  the  policy-holders,  by  which  the  premiums  were 
collected  in  the  manner  originally  agreed  upon.  The  last 
Industrial  policy  written  by  the  Germania  was  dated  Decem- 
ber 27,  1886,  and  this  closed  the  second  unsuccessful  attempt 
on  the  part  of  an  Ordinary  company  to  transact  an  Industrial 
business,  the  Provident  Savings  having  previously  abandoned  a 
similar  effort.  The  principal  reason  on  the  part  of  these  com- 
panies for  discontinuing  the  Industrial  business  must  needs  have 
been  the  fact  that  the  business  was  exceedingly  unprofitable  dur- 
ing the  early  years  of  operation,  and  it  must  have  been  real- 
ized that  it  could  only  be  made  successful  by  the  application  of 
exceptional  ability  and  industry.  The  Prudential  Insurance 
Company  of  America,  like  other  Industrial  companies,  including 
the  Prudential  of  England,  had  passed  through  a  period  of 
financial  difficulties,  but  by  careful  management  and  unremitting 
industry  it  had  now  reached  a  position  where  ultimate  success 
on  a  large  scale  was  only  a  question  of  a  few  years. 

Apart  from  the  words  of  encouragement  and  approval  of  Indus- 
trial insurance  companies  by  actuaries  and  insurance  officials,  and 
the  general  public  approval  as  manifested  in  the  increasing  num- 
ber of  policy-holders,  evidence  is  not  wanting  to  show  the  indi- 
vidual appreciation  of  the  beneficence  of  the  business.  As  a  per- 
tinent illustration  of  the  value  of  Industrial  insurance  from  the 
standpoint  of  public  policy,  I  give  space  to  the  following  letter 
signed  by  one  of  the  Sisters  in  charge  of  the  Troy  Hospital,  of  Troy, 
N.  Y.  It  would  seem  that  a  young  woman  by  the  name  of 
Elizabeth  Flynn  had  died  in  the  hospital,  on  the  5th  of  April, 


162  HISTORY  OF  THE   PRUDENTIAL. 

from  pneumonia.  Some  seven  months  before  she  had  been  pru- 
dent enough  to  take  out  an  Industrial  policy  with  The  Pru- 
dential, paying  a  weekly  premium  of  only  five  cents.  The 
Industrial  policy  would  seem  to  have  been  the  only  means  of 
providing  for  a  respectable  funeral.  The  letter  will  indicate 
the  favorable  view  of  Industrial  insurance  held  by  the  Sister 
Superior : — 

Poor  Miss  Flynn,  before  she  died,  requested  that  I  should  look  after  the 
interest  of  her  policy  and  to  see  that  she  had  a  respectable  burial,  all  of 
which  I  have  done.  I  think  this  branch  of  insurance  is  an  excellent  thing 
for  poor  people,  especially  so  when  the  Company  is  so  prompt  when  called 
upon  for  settlement.  There  is  no  trouble  about  it.  When  Elizabeth  died 
I  notified  the  superintendent  at  room  3,  Harmony  Hall.  He  came  imme- 
diately for  the  necessary  information,  and  has  given  me  a  check  for  the 
amount  the  policy  called  for.  I  feel  interested  and  would  not  hesitate  to 
recommend  the  Company  and  its  system  to  all  who  are  desirous  to  make  a 
provision  for  themselves  or  their  families. 

SISTER  ANGEUNE,  Troy  Hospital. 

As  another  instance  of  the  value  of  the  system  of  Industrial 
insurance,  I  give  space  to  an  item  which  came  to  public  notice 
during  the  year  1885,  and  which  I  quote  from  the  Insurance 
Record  of  June  of  that  year  : — 

Industrial  life  insurance  is  permeating  the  entire  community.  At  the 
recent  fire  at  Sullivan  &  Company's  printing  and  binding  establishment  in 
Cincinnati,  seventeen  young  ladies  were  working  upon  the  fifth  floor  of 
the  bindery.  Of  these,  fifteen  were  burned  to  death.  Of  the  fifteen,  seven 
had  industrial  policies.  Their  total  insurance  amounted  to  $1,102.  Some 
of  the  policies  were  recently  issued  and  were  thus  not  in  full  benefit,  but 
$641  was  the  amount  due,  and  this  was  paid  the  day  the  proofs  of  death 
were  received.  The  total  premiums  on  the  seven  policies  amounted  to  50 
cents  a  week.  The  gross  sum  received  on  all  the  policies  was  $18.15. 

It  is  self-evident  that  such  instances  as  these  had  a  measur- 
able effect  in  promoting  the  growth  of  Industrial  insurance 
among  the  industrial  population,  a  population  ever  confronted 
by  contingencies  leaving  practically  no  choice  between  insur- 
ance and  decent  interment  or  improvidence  and  the  pauper's 
grave. 

The  actual  extent  of  the  public  benefit  already  achieved 
during  the  short  period  of  the  Company's  operations  is  illustrated 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l885-'88.      163 

in  the  following  table,  showing  the  claim  payments  made  by  The 
Prudential  during  the  first  ten  years  of  its  history  : — 

PAYMENTS   MADE   TO   POLICY-HOLDERS    BY  THE  PRUDENTIAL 
INSURANCE   COMPANY.     1876-1885. 


PAYMENTS  TO 
POL1C  Y-H  OLDERS. 

1876,  . 

$1,958  oo 
5,296  oo 
11,338  oo 
23,013  oo 
57,256  oo 
111,508  oo 
157,706  oo 
222,083  oo 
322,382  oo 
418,622  oo 

1877  . 

1878 

1870  . 

1880,  

*^^^A  B  "  "  **  V^^NJ 

1881,  

1882,  

* 

i88t 

V  J 

1884  . 

•  */  •  '   .'/•  • 

1885  . 

1876-1885,  .  . 

$1,331,162  oo 

It  will  be  observed  that  during  the  first  decade  of  business 
operations  more  than  $1,331,000  had  been  disbursed  in  claim  pay- 
ments, rarely  exceeding  $100,  often  as  low  as  $15,  and  sometimes 
as  high  as  $500.  By  1885  the  annual  disbursements  had  exceeded 
$400,000,  which  for  the  time  represented  a  vast  sum  to  be  disbursed 
in  insurance  claims  among  a  population  not  previously  provided 
for  in  this  manner.  Much  of  the  success  of  the  Company  must  be 
attributed  to  its  method  of  paying  claims  within  twenty-four  hours 
after  proofs  have  been  received  at  the  home  office,  and  often  imme- 
diately upon  the  presentation  of  facts  which  leave  no  doubt  that 
the  claim,  on  office  examination,  is  in  all  respects  satisfactory. 
The  Company,  from  the  beginning,  had  acted  on  the  principle 
that  where  the  money  was  needed  it  was  needed  at  once,  but 
at  the  same  time  no  safeguard  was  left  out  of  consideration  for 
the  full  protection  of  the  best  interests  of  the  Company  and  its 
policy-holders. 

A  critical  period  in  the  Company's  history  had  been  reached, 
which  required  the  most  careful  consideration  and  executive 
skill  in  devising  means  to  provide  for  the  increasing  demands 
in  directions  not  anticipated  when  the  Company  was  estab- 
lished, ten  years  before.  I/arge  numbers  of  the  Company's 


164  HISTORY  OF  THE  PRUDENTIAL. 

policy-holders  had  gradually  become  educated  in  life-insurance 
principles,  and  the  tendency  of  life  insurance  towards  small 
amounts  had  been  considerably  extended  upward, — that  is, 
towards  a  class  of  people  somewhat  better  off  in  material  good 
things  and  able  to  pay  larger  premiums,  insuring  for  larger  sums 
on  the  weekly-payment  plan.  The  average  amount  of  Industrial 
policies,  as  well  as  the  average  premium,  was  observed  to  be 
gradually  increasing,  tending  to  confirm  this  view,  and  it  had 
become  clear  to  the  officers  of  tlje  Company  as  early  as  1880, 
as  was  later  so  ably  pointed  out  by  Mr.  Charles  Booth  in  his 
work  on  "  Pauperism  and  the  Endowment  of  Old  Age," 
that  ' '  Provision  in  this  way — that  is  by  Industrial  insurance — 
against  death  has  become  very  general  in  recent  years  ;  and  I  am 
told  that  the  amounts  insured  with  such  companies  as  The  Pru- 
dential tend  continually  to  increase,  showing  that  something 
beyond  mere  funeral  expenses  is  thought  of.  Here  we  have  an 
active  and  natural  growth  of  thrift  which  it  will  be  wise  to  leave 
alone,  except  in  so  far  as  its  action  can  be  facilitated  or  its  benefits 
made  more  secure. ' '  * 

Already  in  1880  a  new  policy  had  been  offered,  by  which  it 
was  possible  to  insure  for  even  sums  of  $500,  but  the  present 
demand  was  rather  for  a  form  of  insurance  providing  not  only  a 
burial  fund,  but,  at  the  same  time,  a  fairly  substantial  support  for 
the  surviving  members  of  a  family;  hence  this  year  the  Company 
offered  to  the  public  a  "Special  Adult"  policy,  which  among 
other  provisions  contained  what  was,  for  the  time,  a  most  liberal 
and  novel  concession  to  Industrial  policy-holders,  namely,  a  non- 
forfeiture or  extended  insurance  clause,  to  take  effect  after  the  pol- 
icy should  have  been  in  force  for  a  period  of  at  least  three  years. 

By  1886  the  Company  was  therefore  able  to  take  the  first  step 
in  the  direction  of  non-forfeiture  provisions  in  Industrial  insurance 
policies,  which  had  been  contemplated  and  aimed  at  in  Mr.  Dry- 
den's  early  efforts,  but  which,  on  the  best  actuarial  advice,  were  not 
expedient  at  the  time,  in  the  absence  of  actual  experience  gained 
by  Industrial  companies.  Reference  is  made  to  the  new  policies 
and  slight  changes  in  the  table  of  Industrial  rates,  in  the  follow- 
ing letter  to  the  field  force,  dated  January  4,  1886  : — 

After  mature  consideration,  the  Board  of  Directors  have  decided  to  in- 
crease slightly  the  Benefits  under  our  present  table,  and  hereafter  policies 

*  p.  156. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l885~'88.      165 

will  be  issued  according  to  the  schedule  hereto  annexed.  Claims  under 
policies  hitherto  issued  will  in  future  be  adjusted  according  to  the  new 
table.  We  hope  our  members  will  see,  in  this  voluntary  action  on  the  part 
of  the  Company,  an  evidence  of  that  fair  and  liberal  spirit  with  which  it  has 
been  our  aim  in  the  past,  and  in  which  for  the  future  we  expect  to  deal  with 
our  policy-holders. 

The  Board  has  also  authorized  the  issuance  of  Adult  Policies  for  amounts 
from  $500  to  $1,000,  under  a  Special  Table  of  rates  somewhat  more  favor- 
able to  the  insured  than  the  $500  Table  previously  issued.  You  will  find 
this  Table  of  benefits  also  hereto  annexed.  Applications  for  these  policies 
must  be  upon  a  special  form  which  will  be  sent  you.  A  special  Medical 
examination  will  be  required,  for  which  the  Company  will  pay  $i.  Policies 
under  this  table  will  be  issued  with  the  following  condition  : — 

If  after  the  payment  of  the  weekly  premium  hereon  for  three  or  more 
years  this  Policy  shall  become  void  by  reason  of  default  in  payment  of  pre- 
miums, the  Company  agrees  to  issue  a  paid-up  policy  for  the  sum  hereby 
insured,  for  a  term  of  as  many  weeks  as  the  number  of  times  the  full  legal 
reserve  upon  this  Policy  at  the  time  of  forfeiture  contains  the  premium  for 
said  sum  insured,  at  the  age  of  the  insured  at  the  time  of  the  lapse,  accord- 
ing to  the  published  rates  of  the  Company  for  Special  Industrial  whole-life 
policies  ;  provided  that  the  Policy  shall  be  surrendered  to  the  Company  and 
application  made  in  writing  for  such  paid-up  policy  within  sixty  days  after 
default  in  the  payment  of  premiums  hereon. 


This  new  form  of  policy  and  the  important  concession  of 
paid-up  insurance  constituted  a  further  distinct  step  in  the  direc- 
tion of  extending  the  Industrial  insurance  system  to  the  masses 
and  the  development  of  what,  for  want  of  a  better  name,  I  have 
elsewhere  called  Industrial-Ordinary — that  is,  insurance  for  any 
amount,  small  or  large,  with  premiums  payable  on  any  plan, 
and  designed  to  meet  the  demands  of  all  the  various  elements 
of  the  American  population.  The  business,  after  ten  short  years, 
had  outgrown  the  earlier  conceptions  ;  it  had  been  modified 
according  to  American  experience,  and  had  been  strictly  adapted 
to  the  social  and  economic  conditions  of  a  rapidly  improving 
Industrial  population,  where  the  poor  of  to-day  are  the  well-to- 
do  of  to-morrow  and  the  rich  of  later  days. 

Taking  into  account  the  facts  of  the  Company's  own  experi- 
ence, The  Prudential  had  placed  the  Special  Adult  policy  on  the 
market,  and,  as  a  further  evidence  of  rapid  adjustment  to  improved 
conditions  and  specific  demands,  commenced  the  issue  of  regular 
Ordinary  life  policies  on  plans  identical  with  those  of  the  leading 
Ordinary  level-premium  companies  of  the  time.  The  first  Ordi- 
nary policy  was  written  on  January  igth  of  the  year  1886,  and 


166  HISTORY  OF  THE   PRUDENTIAL. 

by  the  end  of  the  year  427  of  such  policies,  for  a  sum  of  $585,500, 
were  in  force  on  the  books  of  the  Company.  The  Industrial 
business  by  the  close  of  1886  had  reached  548,433  policies, 
insured  for  $59,328,627.  The  actual  increase  in  business  had 
been  over  125,000  policies,  or  at  a  rate  of  29.8  per  cent,  over  the 
number  in  force  at  the  end  of  the  previous  year.  A  corresponding 
improvement  had  been  made  in  the  finances  of  the  Company, 
and  the  assets  now  exceeded  $1,425,000,  with  corresponding  lia- 
bilities of  over  $1,019,000,  leaving  a  substantial  surplus  of  over 
$406,000. 

By  January,  1887,  The  Prudential  operated  in  eight  States, 
including  Missouri,  where  an  office  had  been  opened  in  the  city 
of  St.  Louis.  In  commenting  upon  the  progress  made  by  the 
Company,  Mr.  Dry  den,  at  the  annual  reunion  of  officers  and 
agents,  at  the  Academy  of  Music,  made  mention  of  the  fact  that 
"The  policy  of  The  Prudential  has  been  to  make  haste  slowly, 
and  it  is  only  a  few  years  ago  that  we  ventured  outside  of  the 
State ;  now  its  agents  are  in  eight  States  in  the  Union,  and, 
among  others,  we  have  in  Pennsylvania  a  membership  of  140,000, 
in  New  York  180,000,  in  New  Jersey  185,000 ;  of  the  latter 
70,000  policies  are  in  force  in  the  city  of  Newark." 

The  work  of  The  Prudential  had  now  become  sufficiently 
known  to  attract  public  attention,  and  one  of  the  New  York  news- 
papers, under  date  of  February  6th,  contained  a  full  description 
of  the  system  and  objects  of  The  Prudential,  from  which  I  make 
a  few  brief  extracts  : — 

If  you  were  to  go  into  any  of  the  many  little  towns  and  villages  which 
lie  thickly  clustered  together  in  the  vicinity  of  Newark,  N.  J.,  and  were  to 
talk  with  the  families  of  limited  means,  or  if  you  were  to  make  a  canvass 
of  the  homes  of  the  industrial  classes  in  the  great  manufacturing  city  just 
named,  you  could  insure  for  yourself  the  discovery  of  at  least  one  subject 
of  common  interest  fo  all  with  whom  you  came  in  contact,  by  mentioning 
the  name  of  The  Prudential  Insurance  Company  of  America.  Here  is  an 
institution  which,  though  but  eleven  years  old,  has  taken  a  firm  hold  upon 
the  confidence  of  the  people  for  whose  benefit  it  was  established,  and  which 
is  doing  splendid  and  beneficial  work  in  all  the  territory  upon  which  it  has 
entered — a  territory,  however,  which,  as  you  will  presently  see,  is  by  no 
means  limited  to  the  region  I  have  mentioned.  In  recent  Sunday  chats  I 
have  described  two  novel  and  successful  schemes  of  insurance.  The  scheme 
of  Industrial  life  insurance  as  exemplified  in  this  great  insurance  company 
of  Newark,  N.  J.,  can  scarcely  be  called  novel,  inasmuch  as  it  has  been  in 
successful  practice  for  nearly  a  dozen  years  and  was  founded  upon  equally 
successful  experience  in  London,  England  ;  but  the  subject  is  one  which 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l885~'88.      167 

I  do  not  think  is  as  widely  understood  or  appreciated  as  it  should  be,  and 
which  is  deeply  interesting. 

On  Broad  street,  in  Newark,  N.  J.,  stands  a  spacious,  handsome  and 
substantial  building,  exclusively  devoted  to  the  business  of  The  Prudential 
Insurance  Company  of  America.  In  1875,  when,  in  the  face  of  great  dis- 
couragement, this  Company  was  organized,  a  small  office  adequately  accom- 
modated the  transaction  of  its  business.  To-day  the  fine  structure  on 
Broad  street  is  becoming  too  small  for  the  transaction  of  that  business. 
Other  insurance  companies  talk  about  millions,  but  they  are  millions  of 
dollars,  not  of  policy-holders.  Can  you  point  to  any  other  company  in  the 
United  States  that  had  issued  anything  like  this  number  of  policies  ?  This 
is  truly  a  company  of  the  people,  for  the  people.  How  does  it  differ  from 
other  companies?  Simply  in  this,  that  it  is  designed  not  as  a  means 
whereby  a  man,  in  sufficiently  affluent  circumstances  to  be  able  to  pay  the 
heavy  premiums  charged  by  other  insurance  companies,  can  arrange  to 
leave  a  fortune  to  his  heirs,  but  simply  for  the  immediate  benefit  of  poor 
families  into  which  death  enters  as  a  doubly  great  affliction,  bringing  not 
only  the  pangs  of  bereavement,  but  the  misery  of  debt.  It  is  a  system 
which  enables  even  the  poorest  families  to  provide  for  the  decent  burial  of 
each  member  of  such  families.  It  is  a  feature  of  The  Prudential  Insurance 
Company  that  death  claims  are  paid  within  twenty-four  hours  after  proofs 
of  death  are  presented.  Granted  that  a  company  of  this  description  is 
honestly  and  honorably  conducted,  its  blessings  to  the  great  army  of  wage- 
workers  must  be  admitted.  That  the  affairs  of  this  Company  are  so  con- 
ducted is  proved  by  the  fact  that  it  has  been  admitted  into  the  insurance 
field  of  eight  different  States, — New  Jersey,  New  York,  Pennsylvania, 
Maryland,  Delaware,  Ohio,  Illinois  and  Missouri, — and  also  into  the  District 
of  Columbia.  This  fact  alone,  under  the  strict  and  just  insurance  laws 
existing  in  these  States,  should  be  a  sufficient  guarantee  of  the  soundness 
of  the  system  and  the  standing  of  the  Company,  but  the  figures  found  in 
the  last  annual  statement  of  the  Company  speak  for  themselves. 

It  is  to  Mr.  John  F.  Dryden,  now  the  President  of  The  Prudential, 
that  the  United  States  is  indebted  for  the  establishment  here  of  this  plan 
of  Industrial  insurance  which  had  proved  to  be  such  a  blessing  to  the  work- 
ing people  of  England.  He  organized  the  Company  and  then,  with  the 
consent  of  the  Board  of  Directors,  went  to  England,  where  he  made  a 
thorough  study  of  the  system  of  Industrial  insurance.  I  regret  that  space 
will  not  allow  me  to  describe  in  detail  the  systematic  and  splendidly  organ- 
ized manner  in  which  the  business  of  this  Company  is  conducted.  Over 
2,000  persons  are  employed  at  headquarters  and  in  the  field. 

Is  there  any  wonder  that  this  system  of  insurance  is  popular  with  the 
people,  and  that  the  number  of  policies  issued  exceeds  a  million  and  a  half? 

The  success  of  the  Company,  no  doubt,  attracted  the  atten- 
tion of  other  insurance  managers,  and  a  number  of  attempts  were 
made  this  year  to  establish  new  Industrial  companies  ;  among 
others,  the  American  L,ife  Insurance  Company  of  Philadelphia 


168  HISTORY  OF  THE   PRUDENTIAL. 

made  a  short  and  unsuccessful  attempt,  while  a  more  satisfactory 
effort  was  made  by  the  People's  Insurance  Company  of  Norwich, 
Conn.,  organized  by  some  of  the  leading  citizens  of  that  State.* 
Actual  business  operations  were  commenced  by  the  latter  company 
in  1888,  and  continued  with  a  fair  degree  of  success  for  a  num- 
ber of  years ;  but  after  having  given  the  business  a  sufficient 
trial,  the  company  discontinued  operations,  reinsuring  its  risks  in 
one  of  the  leading  life  companies.  Few  experienced  underwriters 
could  properly  estimate  the  enormous  difficulties  in  the  way  of 
success  in  the  operation  of  an  Industrial  company.  Few  could 
realize  that  it  required  exceptional  talent  and  exceptional  aptitude 
to  make  this  branch  of  the  i  nsurance  business  a  success.  The  ques- 
tion has^of ten  been  asked  why  it  is  that  there  are  so  few  companies 
like  The  Prudential,  the  Metropolitan  and  the  John  Hancock,f 
that  have  succeeded  on  a  large  scale.  The  answer  is  that,  while 
there  are  to-day  some  ten  or  eleven  other  Industrial  companies 
operating  successfully  on  a  small  scale,  it  is  only  through  men  of 
exceptional  ability  and  by  the  most  arduous  efforts  that  Industrial 
insurance  can  be  made  a  profitable  and  secure  business  enterprise. 
Fortunately  for  the  good  name  of  the  business,  the  companies 
which  organized  unsuccessful  Industrial  branches,  or  which  had 
been  organized  for  the  distinct  purpose  of  transacting  an  Indus- 
trial business  and  had  failed,  discontinued  their  efforts  in  an 
honorable  manner.  Not  a  single  dollar  has  ever  been  lost  to 
an  Industrial  policy-holder  on  account  of  the  failure  of  a  legiti- 
mate Industrial  company.  The  peculiar  difficulties  confronting 
those  who  would  undertake  new  enterprises  of  this  kind  are  well 
stated  in  an  article  in  the  Spectator  for  December,  1887,  which,  in 
addition,  contains  some  pointed  references  to  other  aspects  of  the 
business,  which  may  properly  find  a  place  in  this  summary 


*  Mr.  David  A.  Wells,  the  well-known  political  economist  and  writer 
on  taxation,  was  one  of  the  incorporators  of  this  company. 

t  Among  the  smaller  Industrial  companies,  The  Life  Insurance  Com- 
pany of  Virginia,  with  its  home  office  at  Richmond,  Va.,  has  been  excep- 
tionally successful  in  the  Southern  States.  This  company  had  been 
organized  as  an  Ordinary  company  in  1871  and  met  with  but  very  modest 
success  until,  in  1887,  an  Industrial  department  was  added,  which  by  slow 
degrees  has  reached  proportions  of  considerable  magnitude.  The  first 
Industrial  policy  of  the  Life -Insurance  Company  of  Virginia  was  issued  in 
April,  1887,  although  a  few  so-called  Prudential  policies  had  been  issued 
in  the  cities  of  Richmond  and  Petersburg  during  the  years  1880- '87. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l885~'88.       169 

statement  of  historical  facts  pertaining  to  the  origin  and  growth 
of  The  Prudential  Insurance  Company  :— 

The  peculiar  features  of  industrial  companies  are  such  as  to  almost 
preclude  the  possibility  of  combining  them  with  other  forms  of  life  insur- 
ance successfully.  The  number  of  agents  required  in  the  field  for  canvas- 
sing and  collecting  purposes  is  equivalent  to  a  small  army.  Each  one  of 
these  is  selected  because  of  his  special  qualifications  to  deal  with  the  class 
of  persons  insured,  for  they  have  to  be  handled  with  much  tact,  and  the 
agent  must  possess  a  good  knowledge  of  the  condition  of  each  one  of  his 
clients,  ascertaining  his  earnings,  habits,  etc.  Furthermore,  the  agent 
must  be  punctual,  and  appear  promptly  to  receive  his  premium  at  the 
time  specified  in  each  instance,  or  he  is  liable  to  be  disappointed.  Hun- 
dreds of  men  have  undertaken  to  do  this  work  and  given  up  in  despair 
after  a  few  days'  or  a  few  weeks'  experience,  being  wholly  unqualified  to 
deal  with  the  working  people.  The  amount  of  good  accomplished  by 
these  industrial  insurance  companies  is  not  to  be  measured  solely  by  the 
amount  of  money  paid  to  the  beneficiaries  under  the  policies  issued,  for  it  has 
been  the  means  of  introducing  frugality  where  previously  reckless  extrav- 
agance had  reigned.  The  money  to  pay  the  premiums  is  often  saved  from 
the  beer  or  the  tobacco  allowance  of  the  man,  while  the  women,  who  have 
become  familiar  with  the  usefulness  of  the  system,  practice  all  sorts  of 
economies  to  save  enough  from  their  household  expenses  to  pay  the 
required  weekly  premium.  The  companies  are  overwhelmed  with  letters 
from  persons  who  have  been  benefited  by  this  plan,  testifying  to  the 
manner  in  which  they  have  been  relieved  from  the  direst  distress  by  the 
receipt  of  the  money  secured  to  them  by  one  industrial  policy.  It  is  a 
good  iking  for  the  community  that  this  form  of  insurance  has  come  into  so 
general  favor,  for  it  is  imparting  ideas  of  economy  and  prudence  among 
a  class  of  persons  who  sadly  need  such  teaching. 

The  business  progress  of  The  Prudential  during  the  year 
1887  had  been  exceptionally  satisfactory.  The  net  increase  in 
Industrial  policies  in  force  was  188,476,  equal  to  34.4  per  cent. 
The  assets  of  the  Company  had  increased  to  almost  $2,000,000, 
while  the  surplus  had  increased  to  $487,078.  Some  progress  had 
been  made  in  the  Ordinary  branch,  showing  an  increase  from 
427  policies  in  force  at  the  close  of  1886  to  735  policies,  for  the 
sum  of  $945,000,  in  force  at  the  close  of  the  year  1887. 

In  commenting  upon  the  twelfth  annual  statement  of  the 
Company,  published  during  the  early  part  of  1888,  the  New  York 
Tribune  repeated  its  former  words  of  approval  of  Industrial 
insurance,  stating  that — • 

The  Prudential  is  an  invaluable  help  to  the  poor  and  middle  classes. 
It  paid  in  death  claims,  during  the  year  1887  alone,  nearly  one  million  of 


1 70  HISTORY  OF  THE  PRUDENTIAL. 

dollars.  In  addition  to  this  great  benefit  it  is  working  a  revolution  among 
the  working  classes  in  fostering  habits  of  thrift  and  foresight,  which 
redound  to  their  profit  in  numerous  ways.  That  they  appreciate  their 
relation  to  it  is  shown  from  the  fact  that  about  three-quarters  of  a  million 
of  persons  hold  policies  in  this  Company. 


Mention  has  been  made  of  the  improvement  in  policy  condi- 
tions made  by  the  Company  during  the  preceding  years.  The 
most  important  concession  made  to  policy-holders  was  the  addi- 
tion of  a  paid-up  or  surrender-value  clause  in  the  Special  Adult 
policy  issued  for  the  first  time  during  1886.  However  desirable 
it  would  have  been  to  have  extended  this  provision  to  regular 
Industrial  policies,  it  was  inexpedient  to  make  such  a  concession 
at  that  time,  partly  because  the  business  was  in  its  initial  stage 
and  partly  because  the  necessary  experience  for  such  an  impor- 
tant concession  had  not  been  gained.  This  step,  however,  must 
be  regarded  as  proof  of  the  Company's  honest  intention  to  deal 
equitably  with  all  its  policy-holders,  and  it  is  something  very  con- 
siderably to  the  credit  of  The  Prudential  that  this  important  con- 
cession was  made  before  the  State  Legislatures  had  attempted  to 
force  Industrial  companies  to  grant  surrender  values  on  Industrial 
policies.  I  recall  these  facts  in  view  of  an  attempt  made  during 
the  early  part  of  1888,  in  the  State  of  New  Jersey,  to  pass  a  bill 
compelling  Industrial  companies  to  grant  non- forfeiture  privileges 
after  a  policy  had  been  in  force  for  only  two  years.  It  will  be 
recalled  that,  as  far  back  as  1880,  a  special  committee  of  Insur- 
ance Commissioners  had  reported  adversely  on  the  proposition  to 
compel  Industrial  companies  to  grant  surrender  values.  The 
merits  of  the  case  are  best  set  forth  in  the  following  quotation 
from  the  Insurance  World,  which  will  make  clear  the  Company's 
side  of  the  argument,  at  the  time  when  this  attempt  was  made  to 
burden  the  business  of  The  Prudential  with  legislation  adverse  to 
the  best  interests  of  its  policy-holders  : — 

The  rapid  strides  made  by  the  companies  doing  Industrial  business  has 
brought  its  natural  result  in  awakening  the  attention  of  the  legislators,  and 
a  bill  has  now  been  introduced  in  the  New  Jersey  Legislature  to  render  in- 
dustrial policies  non-forfeitable  after  they  have  been  in  force  for  two  years. 
The  absurdity  of  this  lies  in  the  fact  that  most  of  these  policies  average  less 
than  $150  each.  The  net  reserve  at  the  end  of  the  second  year  at  age 
twenty-five  would  be  12.28  per  thousand  by  the  American  Experience  4j^ 
per-cent.  table.  A  policy  for  $150  on  the  ordinary  life  plan  would  accumu- 
late in  two  years  a  reserve  of  $1.93  only.  But  Industrial  insurance  is  only 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l885~'88.      171 

term  insurance  in  fact,  and  the  reserve  would  be  so  infinitesimally  small 
that  a  good  actuary  with  a  powerful  glass  would  scarcely  be  able  to  distin- 
guish it.  In  fact  the  paid-up  insurance  would  hardly  be  large  enough  to 
pay  the  fare  of  the  individual  who  should  go  to  collect  it. 

The  subject  was  also  referred  to  in  the  annual  report  of  the 
Insurance  Commissioner  of  Ohio  for  1888,  to  which  the  Chronicle 
of  New  York,  under  date  of  July  26th,  replied  in  the  following 
manner : — 

We  think  a  number  of  reasons  can  be  given  why  the  granting  of  sur- 
render values  to  Industrial  policy-holders  after  the  time  mentioned  by  the 
Ohio  Commissioner  would  be  impracticable,  not  to  say  inexpedient.  Some 
of  the  reasons  may  be  briefly  mentioned.  The  average  Industrial  policy  is 
small,  probably  not  much  more  than  $100.  The  reserve  on  a  policy  for  this 
amount  is  very  small  indeed  at  the  end  of  two  years  ;  in  fact,  it  would  not 
amount  to  a  large  sum  at  the  end  of  ten  years,  whatever  the  age  of  the  in- 
sured. The  expense  of  actuarial  calculation  of  the  surrender  value  and  the 
deduction  of  a  proper  surrender  charge  would  make  the  "  equitable  surren- 
der value  "  in  many  cases  an  infinitesimal  sum.  In  short,  the  cost  of  valu- 
ing Industrial  policies  as  suggested  by  Mr.  Kemp  would  very  likely  be 
heavy  enough  to  offset  any  possible  benefit  the  lapsing  policy-holder  might 
derive.  Moreover,  the  lapse  tendency  in  Industrial  insurance  is  very 
strong.  The  Prudential,  whose  experience  the  Ohio  Commissioner  quotes, 
lost  over  320,000  policy-holders  last  year  by  lapse.  Undoubtedly  the  major- 
ity of  these  lapses  were  on  policies  that  had  been  in  existence  less  than  two 
years  ;  still  a  considerable  number  of  the  policies  had  probably  reached  that 
age.  The  chief  object  of  Industrial  insurance  is  to  furnish  a  burial  fund.  A 
matter  worthy  of  careful  thought  is  the  question  whether  whatever  forfeit- 
ure there  is  in  this  plan  of  insurance  might  not  better  remain  what  it  now 
is,  a  slight  inducement  toward  persistence.  Industrial  insurance  is  trans- 
acted on  the  stock  principle.  There  are  no  dividends,  and  the  premiums, 
while  necessarily  relatively  large,  are  not  excessive  when  the  tremendous 
cost  of  weekly  collections  is  taken  into  account.  The  opinion  which  Mr. 
Kemp  appears  to  hold  about  the  ratio  of  profit  in  the  Industrial  business  in 
Ohio  will  probably  be  modified  in  a  few  years,  when  this  kind  of  insurance 
has  been  prosecuted  longer  in  his  State. 

Without  discussing  at  length  so  involved  and  complex  a 
question  as  the  Company's  practice  in  dealing  with  lapsed  Indus- 
trial policies,  I  need  only  repeat,  what  I  have  stated  in  the  begin- 
ning, that  Mr.  Dryden  and  his  associates  had  fully  considered  this 
question  before  a  single  policy  had  been  issued,  and  the  subject 
received  constant  attention  during  every  year  of  the  Company's 
early  existence.  After  sufficient  experience  had  been  gained 
The  Prudential  was  the  first  Industrial  company  to  grant  not 


172  HISTORY  OF  THE  PRUDENTIAL. 

only  paid-up  policies,  but  also  cash-surrender  values  to  Industrial 
policy-holders. 

Attempts  were  made  this  year  to  create  a  class  sentiment 
against  Industrial  insurance  by  sensational  newspaper  articles  on 
the  subject  of  life  insurance  for  minors.  The  year  previous, 
articles  had  appeared  in  St.  Louis  newspapers  reflecting  upon 
the  practice  of  Industrial  companies,  while  this  year  they  were 
confined  to  a  few  newspapers  of  Philadelphia. 

This  agitation,  no  doubt,  was.  largely  the  result  of  an  effort 
on  the  part  of  the  Seventh  Ward  Charity  Organization  Society 
of  Philadelphia,  which  had  petitioned  the  Pennsylvania  Legis- 
lature to  secure  legislative  prohibition  of  the  life  insurance  of 
children,  on  the  ground  that  mothers  were  likely  to  murder  their 
children  for  the  purpose  of  obtaining  the  small  amounts  of  insur- 
ance receivable  at  death.  The  argument  in  favor  of  adverse 
legislation  on  the  subject  of  life  insurance  of  children,  from  the 
viewpoint  of  the  Philadelphia  Charity  Organization  Society, 
was  well  answered  in  a  brief  article  in  the  Standard  of  Boston, 
under  date  of  November  3,  1888,  as  follows  :— 

A  Philadelphia  charity  organization  declares  its  intention  of  memorial- 
izing the  next  Pennsylvania  Legislature  to  abolish  infant  insurance.  This 
idea  was  doubtless  fed  and  fired  by  the  half-baked  newspaper  articles  that 
have  followed  one  or  two  sporadic  cases  of  maltreatment  of  insured  infants. 
Adopting  momentarily,  for  the  sake  of  argument,  the  low  view  of  human 
nature  evidently  held  by  these  Philadelphia  philanthropists  of  small 
research,  a  little  painstaking  would  have  taught  them  that  infant  insurance, 
as  carried  on  by  the  reputable  companies,  is  so  arranged  as  to  offer  no 
incentive  for  manifestations  of  avaricious  cruelty  or  crime.  But  even  if 
this  were  not  so,  we  have  greater  faith  in  our  fellow-beings  than  to  believe 
them  capable  of  such  horrible  practices  for  the  ignoble  pittances  they  would 
secure. 

I  have  made  mention  of  these  fragmentary  evidences  of  the 
increasing  opposition  to  the  practice  of  Industrial  companies 
in  accepting  small  risks  on  the  lives  of  children  for  burial  pur- 
poses, to  account  for  more  recent  and  more  determined  oppo- 
sition to  this  branch  of  the  business,  to  which  reference  will  be 
made  later  on. 

Whatever  might  then  or  now  be  said  or  thought  of  Indus- 
trial insurance  from  the  standpoint  of  public  policy  or  of  the 
individual  policy-holders,  this  much  is  certain  :  it  is  this  form 
of  life  insurance  for  the  masses  which  alone  has  survived  in  the 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l885~'88.       173 

struggle  for  existence,  has  accomplished  what  it  set  out  to  do,  has 
increased  in  extent  of  operations  from  year  to  year,  with  never  a 
check  or  evidence  of  diminishing  popularity,  and  represented  at  the 
close  of  1888  a  more  formidable  array  of  figures  and  facts  in  its 
own  support  than  could  be  marshalled  in  behalf  of  any  other  form 
of  life  insurance  or  investment  in  America.  While,  previous  to  the 
organization  of  The  Prudential,  a  large  number  of  efforts  had  been 
made  to  organize  insurance  companies  or  societies  for  the  benefit 
of  the  industrial  population,  not  one  had  succeeded  in  reaching  a 
sufficient  degree  of  popularity  or  of  financial  security  to  survive 
more  than  a  score  of  years  at  the  most.  But  these  efforts  had  not 
come  to  an  end  with  the  organization  of  an  Industrial  company, 
they  had  not  been  seriously  hindered  by  the  growth  of  Industrial 
insurance  in  all  parts  of  the  country,  but  in  a  measure,  and 
contrary  to  expectation,  an  increasing  number  of  ventures  in  all 
directions  had  been  made  to  compete  with  the  legitimate  form 
of  Industrial  life  insurance  by  methods  offering  cheap  insurance  to 
a  large  element  of  the  population  still  unfamiliar  with  insurance 
principles,  and  unfamiliar  with  the  past  history  of  unsuccessful 
insurance  enterprises.  Among  a  large  number  of  pseudo-life- 
insurance  efforts  made  during  the  early  years  of  Industrial  insur- 
ance history,  I  have  already  made  mention  of  some,  and  space  is 
not  at  my  command  to  deal  exhaustively  with  this  subject.  Near 
the  close  of  1888,  however,  the  operations  of  pseudo  or  bogus 
imitations  of  Industrial  companies  had  increased  to  such  an 
extent  that  the  State  Department  of  Insurance  of  New  Jersey 
found  it  necessary,  in  an  open  circular,  to  warn  the  public  to 
beware  of  the  Industrial  Association  of  America,  with  offices  at 
Newark,  N.  J.  According  to  the  Investigator,  October  13,  1888, 
* '  This  fraud  is  evidently  attempting  to  trade  on  the  high  commer- 
cial standing  and  long-established  reputation  of  The  Prudential 
Insurance  Company  of  America.  The  similarity  of  names  would 
be  traded  on  to  the  advantage  of  the  fraud  and  disadvantage  of 
the  legitimate  corporation." 

An  apparently  honest  but  rather  curious  effort  in  the  direc- 
tion of  workingmen's  insurance  for  burial  purposes  was  made 
this  year,  at  Camden,  in  the  State  of  New  Jersey,  by  the  United 
States  Funeral  Directing  Company,  which  proposed  to  operate 
on  a  plan  entirely  new  and  different  from  any  other  method  of 
insurance  provision  against  contingencies.  A  somewhat  similar 
effort  in  this  direction  had  been  made  as  far  back  as  1873,  *n 


174  HISTORY   OF  THE   PRUDENTIAL. 

Richmond,  Va.,  and,  no  doubt,  in  other  cities  also,  but  without 
success.  The  object  of  the  Camden  company  was  to  provide 
for  a  decent  interment  at  a  cost  of  from  $30  to  $100,  but  after  a 
brief  experience  the  attempt  was  discontinued.  The  reasons  for 
failure  are  that  life  insurance  on  the  Industrial  plan,  after  the 
initial  stage  has  been  passed,  aims  at  more  than  mere  provision 
for  burial  expenses.  Persons  will  begin  by  insuring  for  five-cent 
premiums  for  burial  purposes,  but  after  a  year  or  more  increase 
their  premiums  to  secure  a  sufficient  sum  to  pay  the  cost  of  the 
last  illness ;  later  on,  by  further  increase  in  premiums,  provi- 
sion will  be  made  for  dependents,  and  in  this  manner  a  more 
complete  purpose,  as  in  Ordinary  insurance,  is  secured  or 
largely  realized.  Hence,  the  failure  of  the  Funeral  Directing 
Company  came  not  unexpectedly  to  those  who  had  made  a 
thorough  study  of  Industrial  insurance  underwriting. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l889~'9I.      175 


CHAPTER  XI. 

THE   PRUDENTIAL   INSURANCE   COMPANY   OF   AMERICA, 
1889-1891. 

The  difficulties  which  had  been  experienced  during  1888  had 
not  materially  hindered  the  progress  of  the  Company,  and  by 
the  close  of  the  year  there  were  over  850,000  Industrial  policies 
in  force.  In  addition  there  were  now,  in  the  Ordinary  branch, 
915  policies  in  force,  indicating  a  slight  but  substantial  increase. 
The  growth  of  the  Company  made  necessary  the  serious  consid- 
eration of  the  erection  of  a  home-office  building,  and  during  the 
year  a  plot  of  ground  on  Broad  street  was  purchased  for  the 
purpose  of  erecting  thereon,  in  course  of  time,  a  substantial 
structure.  The  Insurance  Times,  in  its  issue  of  December,  1888, 
quotes  from  the  Newark  Daily  Journal  the  following  reference 
to  the  real  estate  transaction  : — 

In  a  few  years  The  Prudential  Insurance  Company  will  erect,  at  the 
corner  of  Broad  and  Franklin  streets,  a  building  that  will  be  an  ornament 
to  the  city.  The  plot  of  ground  owned  by  the  Company  has  a  front  of  89 
feet  on  Broad  street,  and  it  runs  back  160  feet  to  an  alley.  It  is  proposed 
to  have  a  large  open  court  in  the  middle  of  the  plot,  with  an  entrance  from 
the  alley  for  carriages,  and  the  building  to  rise  on  four  sides  to  a  height  of 
six  or  more  stories.  But  the  managers  will  not  decide  upon  any  plan 
until  after  the  finest  buildings  in  this  country  and  Europe  have  been 
inspected,  the  aim  being  to  construct  an  edifice  that  will  meet  all  the 
requirements  of  the  rapidly  increasing  insurance  business.  Plenty  of 
light  and  air  will  be  needed  for  the  army  of  male  and  female  clerks  and 
other  employees,  for  the  Company  has  so  prospered  since  its  organization, 
thirteen  years  ago,  that  over  800,000  payments  are  now  recorded  weekly  at 
the  home  office  in  Newark  on  life-insurance  policies.  The  Company 
employs  several  thousand  clerks  and  agents,  and  is  extending  its  business 
to  the  growing  towns  in  all  the  States  and  Territories. 

For  reasons  which  need  not  be  dwelt  upon,  the  Company, 
very  soon  after  this  transaction,  did  not  consider  the  property 
sufficient  for  its  purpose,  and  during  the  early  part  of  1889  one 


176  HISTORY  OF  THE   PRUDENTIAL. 

of  the  most  desirable  pieces  of  real  estate  in  Newark,  in  the 
heart  of  the  city,  with  a  frontage  of  70  feet  on  Broad  street, 
was  purchased  for  the  sum  of  $275,000,  as  a  site  for  the  home- 
office  building,  to  be  constructed  during  the  next  few  years. 
According  to  Insurance  under  date  of  February  8,  1889,  "It  is 
the  intention  of  the  Company  to  erect  on  this  lot  a  substantial 
and  handsome  building  for  the  accommodation  of  its  own  vast 
and  growing  business  and  affording  large  room  for  rental  pur- 
poses. The  work  of  construction  will  not  be  begun  for  some  two 
years,  for  the  Company's  lease  of  its  present  quarters  has  still 
four  years  to  run,  and  after  the  plans  are  fully  matured  something 
like  two  years  will  be  taken  for  carrying  them  out.  The  Pru- 
dential has  never  been  in  a  hurry  from  the  beginning.  It  was  very 
particular  about  foundations.  And  it  built  to  stay. ' ' 

A  further  reference  to  the  purchase  of  the  property  and  the 
proposed  home-office  building  of  the  Company  occurs  in  the 
Insurance  Critic  for  March,  1889  : — 

The  Prudential  Insurance  Company  of  America,  which  so  successfully 
conducts  the  business  of  industrial  life  insurance  from  its  home  office  at 
Newark,  has  recently  purchased  a  valuable  and  central  site  in  that  city,  with 
the  design  of  erecting  thereon  a  commodious  and  handsome  office  build- 
ing, that  shall  be  an  architectural  ornament  to  the  place.  The  property 
is  situated  at  the  corner  of  Broad  and  Bank  streets,  and  was  bought  from 
two  owners ;  the  larger  part  from  Justice  Joseph  Bradley,  of  the  United 
States  Supreme  Court,  for  $275,000,  and  the  balance,  known  as  the  Wiss 
property,  for  $38,000,  the  entire  outlay  being  $313,000.  The  frontage  is 
70  feet  on  Broad  street,  265  feet  on  Bank  street,  and  140  feet  on  I/ibrary 
court,  and  the  entire  plot  contains  25,000  square  feet.  The  new  edifice  will 
be  built  on  the  portion  purchased  from  Justice  Bradley,  and  will  be  so  con- 
structed that  an  extension  in  harmony  with  the  main  design  can  be  erected 
when  the  growing  business  makes  it  necessary.  *  *  *  *  The  general 
design  is  to  put  up  a  nine-story,  fire-proof  building,  in  size  70  by  231  feet,  to 
cost  about  $500,000.  All  the  conveniences  and  improvements  devised  by 
modern  skill  and  art  will  be  introduced.  It  is  believed  that  the  favorable  loca- 
tion and  the  interior  attractions  will  occasion  a  large  demand  for  offices  in  the 
space  on  the  several  floors  not  required  by  the  company  itself  for  the  trans- 
action of  its  business.  The  company  will  make  use  of  the  larger  portion 
of  the  building  in  its  own  work.  When  it  entered  its  present  home  office, 
less  than  six  years  ago,  its  clerical  force  for  the  office  was  below  fifty ;  it 
now  employs  two  hundred  and  twenty-five  clerks.  At  first  it  rented  out 
the  two  upper  floors,  but  increase  of  business  soon  compelled  it  to  occupy 
the  entire  edifice,  from  basement  to  attic,  to  hire  the  basement  in  the 
adjoining  building  for  the  construction  of  additional  vault  room,  and  to 
place  its  local  agency  force  in  other  parts  of  the  city.  The  company's 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,   1889-91.      177 

employees  are  now  numerous  enough  to  form  a  circle  of  society  by  them- 
selves. They  have  organized  a  literary  and  musical  association,  which 
holds  regular  semi-monthly  meetings.  The  Prudential  "Old  Guard"  in- 
cludes those  who,  having  served  the  company  faithfully  and  continuously 
for  certain  periods,  are  presented  with  certificates  and  badges,  bronze 
badges  for  five  years'  service,  silver  badges  for  ten  years,  gold  badges 
for  fifteen  years,  and  gold  badges  with  a  diamond  set  in  each  for  twenty 
years.  The  members  [of  the  Old  Guard]  receive  also  special  consideration 
in  their  business  dealings  with  the  office.  The  company's  growing  business 
and  increasing  clerical  force  show  the  need  of  enlarged  accommodations. 
The  building  to  be  erected  will  also  be  a  monument  to  the  prudence  and 
forethought  of  the  company's  large  clientage.  Nearly  a  million  people 
hold  its  policies,  and  of  this  great  number  about  one  hundred  thousand  are 
in  Newark  and  its  near  vicinity. 

The  plans  of  the  Company  with  respect  to  the  proposed 
building  were  carried  out  practically  in  accordance  with  the  pre- 
ceding outline,  ground  was  broken  in  September,  1890,  the  new 
building  was  completed  during  the  early  part  of  1892,  and  actual 
possession  was  taken  on  May  i,  1892.  So  rapid,  however,  was  the 
growth  of  the  Company,  and  so  promising  its  future,  that  steps 
were  taken  to  purchase  more  real  estate  than  was  required  at  that 
time,  and  during  the  latter  part  of  1889  an  additional  portion  of 
real  estate  was  purchased  contiguous  to  that  previously  acquired. 
The  subject  will  be  further  referred  to  under  its  proper  date. 

The  good  work  of  the  Company  had  continued  to  be  appre- 
ciated, and  volumes  could  be  filled  with  the  expressions  of  public 
approval  to  be  found  in  the  records  and  archives  of  The  Pruden- 
tial. One  of  the  earliest  friends  of  the  Company,  when  the  busi- 
ness was  in  its  infancy,  had  been  the  Metuchen  Inquirer •,  cordially 
approving  of  the  then  new  and  untried  plan  of  Industrial  insur- 
ance, when  the  same  was  first  made  known  to  the  people  of  New 
Jersey.  I  can  not  do  better  than  quote  from  an  issue  of  this 
same  paper,  during  the  early  part  of  1889,  a  few  words  of  further 
commendation  of  the  results  of  Industrial  insurance,  as  observed 
in  this  community  :— 

The  total  amount  paid  in  claims  to  relatives  of  deceased  policy-holders 
has  now  reached  nearly  $4,000,000.  The  benefit  derived  from  these  pay- 
ments is  incalculable,  because  it  may  be  said  that  in  many,  if  not  in  the* 
majority  of  cases,  these  policies  were  the  only  available  asset  which  the 
relatives  of  the  deceased  had  at  the  time  of  their  death.  That  the  masses 
are  coming  fully  to  realize  the  great  value  of  Industrial  insurance  in  a 
strong,  reliable  company  is  shown  from  the  fact  that  The  Prudential  has 
now  about  900,000  policies  in  force.  They  paid  over  13,000  claims  in  1898, 


178  HISTORY   OF  THE   PRUDENTIAL. 

The  Prudential  had  not  only  made  many  friends  from  the 
beginning,  but  it  had  never  forfeited  the  good-will  of  any  one 
thoroughly  familiar  with  its  obj  ect  and  results  as  an  agency  for 
the  improvement  of  the  condition  of  the  industrial  population. 
This  view  is  fully  and  ably  set  forth  in  a  lengthy  article  on  the 
Company's  business  operations  during  the  year  1888,  in  the 
Baltimore  Underwriter  of  January  21,  1889,  from  which  I  make 
a  brief  extract,  as  a  further  proof  of  the  increasing  public 
approval  of  the  Prudential  form  of  life  insurance  in  America  : — 

While  The  Prudential  is  thus  showing  what  can  be  done  by  intelligent 
and  energetic  effort  in  the  upbuilding  of  a  great  providential  institution,  it 
serves  at  the  same  time  as  a  leading  exponent  of  a  system  most  admirably 
adapted  to  the  special  needs  of  the  industrial  classes.  It  is  teaching  with 
all  the  force  of  a  singularly  successful  example  ;  it  is  educating  the  wage- 
earners  of  the  country  to  the  importance  of  thrift  and  the  cumulative  value 
of  small  savings  ;  it  shows  them  how  the  benefits  of  life  insurance  can  be 
brought  to  their  own  doors,  and  be  made  available  and  secure  for  them,  no 
matter  how  humble  their  means  or  how  enforced  their  economy.  Before 
the  introduction  of  the  industrial  system,  the  largest  class  in  every  com- 
munity, the  class  more  than  all  others  needing  the  protective  care  of  life 
insurance,  was  practically  denied  its  advantages.  Thousands,  through  the 
convenient  methods  and  the  ready  adaptation  of  The  Prudential,  have  real- 
ized the  value  of  its  help  in  time  of  need,  and  they  in  turn  naturally  advertise 
it  among  their  friends,  and  make  its  name  a  familiar  household  word. 

Another  clear  and  comprehensive  expression  of  approval  on 
the  part  of  a  public  journal  not  connected  with  insurance  inter- 
ests, but  which  had  been  among  the  first  to  recognize  the  impor- 
tance of  extending  the  principles  of  life  insurance  to  the  masses, 
is  to  be  found  in  the  Boston  Herald  of  September  2,  1889.  From 
along  article  on  the  subject  of  Industrial  insurance  and  "how 
the  poor  may  provide  a  burial  fund,"  I  make  the  following 
extracts,  as  a  further  illustration  of  the  increasing  intelligent 
recognition  of  the  methods  and  results  of  life  insurance  on  the 
Industrial  plan : — 

One  of  the  most  surprising  developments  of  modern  life  insurance  is  in 
the  direction  of  what  is  called  industrial  or  burial  fund  insurance.  This 
^feature,  which  is  of  comparatively  recent  growth,  has  been  forced  upon  the 
insurance  companies  by  the  necessities  of  families  of  small  means.  Its 
primary  object  is  to  provide  a  modest  sum  for  funeral  expenses,  and  is  radi- 
cally different  from  ordinary  life  insurance. 

This  class  of  insurance  may  be  called  A  GROWTH  OF  THE  TIMES,  and 
the  increasing  demand  for  it  is  one  of  the  most  encouraging  features  in  the 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,   iSSQ-'QI.      179 

industrial  world  at  the  present  time.  But  a  few  years  ago  it  was  nearly  im- 
possible for  one  to  obtain  a  policy  of  insurance  for  less  than  $1,000.  Few 
companies  would  grant  insurance  on  the  lives  of  women,  and  no  company 
would  insure  children.  Up  to  the  time  of  the  introduction  of  the  plan  of 
industrial  insurance  into  this  country,  the  average  amount  of  life  insurance 
policies  in  force  in  the  United  States  was  $2,500.  The  efforts  of  most  com- 
panies were,  and  still  are  directed  toward  securing  large  individual  risks,  and 
the  manner  in  which  the  heavy  risks  that  have  been  placed  in  recent  years 
are  exploited  shows  the  estimation  placed  upon  this  class  of  business  by 
insurance  companies.  Not  only  were  policies  of  less  than  $1,000  seldom 
issued,  but  premiums  were  not  accepted  oftener  than  quarterly.  Naturally 
this  high  cost  of  insurance  cut  off  from  participation  therein  those  who  most 
needed  the  protection.  In  fact,  the  vast  majority  of  the  community  were 
unable  to  procure  insurance,  and  would  have  been  unable  to  pay  the  pre- 
miums, even  if  secured.  To  them,  policies  for  small  amounts  with  fre- 
quent payments  of  premiums  are  a  necessity.  This  need  was  supplied  by 
the  scheme  of  industrial  insurance,  the  plan  for  which  has  been  largely 
drawn  from  English  sources. 

Among  the  objections  that  have  been  raised  against  industrial  insur- 
ance at  various  times  has  been  that  of  the  temptation  to  infanticide  ;  but  this 
argument  has  been  so  frequently  met  by  official  statistics  and  reports  from 
English  and  American  sources,  that  only  the  ill-informed  now  hold  or  ad- 
vance such  theories.  The  plan  early  adopted  by  the  companies,  and  uni- 
formly pursued  since,  of  granting  an  increasing  insurance  for  a  uniform 
period,  so  that  as  the  child  advances  in  years  the  benefits  increase,  reach- 
ing the  maximum  at  about  the  age  when  the  child  becomes  a  possible 
wage-earner,  and  thus  a  contributor  to  the  family  funds,  has  done  much  to 
lessen  any  possible  danger  that  might  come  from  this  direction.  As  a  mat- 
ter of  fact,  the  cases  of  infanticide  for  the  sake  of  insurance  money  are  ex- 
ceedingly rare  ;  indeed,  much  more  uncommon  than  similar  cases  in  ordi- 
nary life  insurance,  where  the  temptation  is  greater. 

Another  criticism  is  based  on  the  great  number  of  policies  lapsed.  The 
critics  evidently  forget  that  the  conditions  are  radically  diiferent  from  those 
attending  ordinary  life  insurance.  So  many  things  affect  the  connection  of 
the  policy-holders  with  the  companies,  such  as  the  great  variety  of  ages, 
the  small  incomes  of  those  who  carry  the  insurance,  and  the  fact  that  these 
incomes  are  liable  to  sudden  shrinkage  or  entire  loss.  All  these  causes, 
and  many  others  which  might  be  named,  have  so  much  effect  upon  the 
question  that  it  is  not  strange  that  the  ratio  of  lapses  should  be  very 
large. 

Other  objections  raised  are  the  trifling  amount  of  benefit  paid  and  the 
lack  of  insurable  interest  of  the  parents  in  the  lives  of  children,  who  com- 
pose the  bulk  of  the  risks  exposed.  But  these  objections  are  answered  by 
calling  attention  to  the  fact  that  the  benefit  is  intended  to  be  only  of  the 
nature  of  a  burial  fund,  that  it  is  as  large  as  the  one  carrying  the  insurance 
can  afford  to  pay  premiums  upon,  and  that  the  desire  of  a  parent  to  properly 
and  decently  bury  a  dead  child,  without  relying  either  upon  public  or  pri- 
vate charity,  may  well  be  a  substitute  for  an  insurable  interest. 


l8o  HISTORY  OF  THE   PRUDENTIAL. 

The  dangers  which  are  connected  with  this  plan  of  insurance,  so  far  as 
the  policy-holders  are  concerned,  are  largely  those  which  are  inseparably  con- 
nected with  insurance  of  whatever  nature. 

From  the  little  paper  printed  for  The  Prudential  Insurance  Company, 
and  from  other  industrial  insurance  literature  which  is  accessible,  it 
appears  that  the  industrial  companies  endeavor  to  minimize  the  lapses 
as  much  as  possible ;  they  help  the  member  avoid  them  by  granting 
him  a  grace,  so  that  every  little  disturbance  may  not  invalidate  his 
insurance,  and  they  make  it  a  vital  consideration  to  the  agent  to  make 
the  lapses  as  small  as  possible.  The  idea  adopted  seems  to  be  that  "a  busi- 
ness worth  doing  is  worth  keeping."  A  member  never  secedes,  the  reve- 
nue from  whose  policy  a  company  would  not  far  rather  have  maintained, 
for  the  lapses  are  not  on  business  which  has  been  in  force  for  a  few  years, 
but  upon  business  in  the  early  stages  of  its  existence  before  it  has  covered 
expenses  or  yielded  any  margin  of  surplus. 

Insurance  Commissioner  Merrill  has  the  following  to  say  of  the  indus- 
trial business  in  his  report  for  1889:  "This  branch  of  life  insurance,  com- 
paratively new  to  this  country,  has  had  in  other  lands  a  development  which 
best  attests  the  public  want  thereby  met.  That  it  has  its  limitations  and  its 
dangers  its  most  earnest  advocates  attest,  but  there  is  a  field  within  which 
it  may  properly,  and  with  careful  restrictions,  commendably  work." 

Too  much  credit  can  not  be  awarded  to  those  companies  that  have,  in 
the  face  of  innumerable  obstacles,  carried  the  blessings  of  life  insurance  to 
the  poor  and  lowly,  and  made  it  possible  for  even  the  women  and  children 
to  share  in  the  advantages  of  the  indemnity  it  secures. 

To  these  words  of  approval  and  advice  little  need  be  added 
in  further  explanation.  It  would  be  well,  indeed,  for  the  best 
interests  of  the  people  if  public  journals  would  at  all  times  give  as 
fair  and  open  an  expression,  supported  by  official  and  other 
proof,  of  matters  affecting  directly  the  interests  and  welfare  of  the 
wage-earners  of  the  State  ;  but,  unfortunately,  very  often  sensa- 
tional newspapers  will  try  to  discourage  public  confidence  in 
financial  institutions  by  ill-advised  criticisms  or  unwarranted 
assertions.  It  is  something  very  considerably  to  the  credit  of 
the  Boston  Herald  that  it  maintained  consistently  its  attitude  in 
favor  of  workingmen's  insurance  for  so  long  a  period  as  from 
1853  to  1889. 

The  success  of  The  Prudential  was,  no  doubt,  largely  respon- 
sible for  the  organization  of  a  new  Industrial  insurance  company 
in  the  city  of  Newark  during  the  year  1889,  under  the  name  of 
The  United  States  Industrial  Insurance  Company.  What  has 
been  said  of  The  People's  Insurance  Company  of  Norwich  applies 
equally  well  to  this  company,  which,  after  struggling  against 
enormous  difficulties  extending  over  a  period  of  a  little  more 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  1889-^91.       l8l 

than  eight  years,  withdrew  from  the  business  and  reinsured  its 
risks,  under  date  of  June  24,  1896,  with  the  Metropolitan  Life 
Insurance  Company  of  New  York. 

As  it  was  well  pointed  out  at  the  time,  it  is  not  only  an  ex- 
ceedingly expensive  matter  to  establish  an  Industrial  insurance 
company,  but  practically  an  almost  impossible  undertaking  in 
view  of  the  great  difficulty  in  obtaining  the  required  body  of  men 
able  to  manage  local  agencies  with  even  a  fair  degree  of  success. 
As  a  rule,  new  Industrial  companies  in  the  beginning  unwisely 
attempted  to  obtain  their  agents  and  managers  from  the  existing 
Industrial  companies,  who,  in  turn,  would  attempt  to  "twist" 
policies  by  transferring  business  from  the  older  companies  to  the 
new,  this  in  turn  leading  to  inter-company  warfare,  which  natu- 
rally caused  strife  and  bitterness  and  unnecessary  waste  of  money, 
to  which  must  be  added  a  not  inconsiderable  degree  of  hindrance 
to  the  development  and  best  interests  of  the  companies  and  their 
policy-holders.  Other  companies  have  been  started  since  that 
date,  but,  as  a  rule,  their  early  experience  has  been  very  much 
along  these  lines.  Thus,  during  the  same  year,  an  Industrial 
company  was  organized  in  Cincinnati  by  the  name  of  the  West- 
ern and  Southern,  which  also,  at  first,  for  a  short  period  at  least, 
gave  considerable  trouble  to  the  agents  of  The  Prudential.  After 
a  while,  however,  these  difficulties  were  overcome,  and  the  West- 
ern and  Southern  has  now  quite  a  large  number  of  policy-holders 
in  some  of  the  principal  cities  of  the  Middle  West. 

The  business  operations  of  The  Prudential  during  the  year 
1889  had  been  exceptionally  successful,  and  at  the  close  of  the 
year  the  Company  had  1,099,312  Industrial  policies  in  force  for 
the  sum  of  $i  17, 357, 415  of  insurance  protection.  The  premium 
income  during  the  year  had  reached  the,  for  the  time,  enormous 
sum  of  almost  $4,500,000,  while  the  amount  paid  in  losses  was 
$1,300,000.  The  net  gain  in  Industrial  insurance  during  the 
year  had  been  249,248  Industrial  policies,  or  equal  to  29.3  per 
cent,  increase  over  the  preceding  year.  In  Ordinary  insurance 
the  Company  had  made  considerable  progress,  doubling  the 
number  of  policies,  the  increase  being  from  915  in  force  at  the 
close  of  1888  to  1,839  in  force  at  the  end  of  1889.  Corresponding 
gains  were  made  in  assets  and  surplus,  indicative  of  the  healthy 
and  solid  growth  of  the  Company  during  the  year. 

The  progress  of  the  Company,  in  both  departments  of  the 
business,  continued  during  the  year  1890.  An  important  step  in 


lS2  HISTORY   OF  THE   PRUDENTIAL. 

advance  was  made  during  this  year,  in  that  a  concession  was 
granted  to  the  policy-holders  by  the  addition  of  a  five-year  divi- 
dend provision  to  the  holders  of  Special  Adult  policies. 

In  a  general  way  the  year  was  rather  an  uneventful  one  from 
an  insurance  standpoint,  and  the  only  matter  deserving  of  more 
than  passing  notice  was  an  attempt  in  the  State  of  New  York  to 
prohibit  the  insurance  of  children  under  ten  years  of  age.  A 
bill  to  this  effect  had  been  introduced  and  referred  to  the  Com- 
mittee on  Insurance,  which  gave  an  extended  hearing  to  both 
sides  of  the  controversy,  and  I  can  not  do  better  than  quote 
the  following  passage  in  reference  to  the  subj  ect  from  the  Spectator 
of  March  13,  1890  : — 

The  insurance  committee  of  the  Legislature  has  given  a  hearing  to 
those  who  are  interested  in  the  bill  recently  introduced  to  prevent  the 
assurance  of  the  lives  of  children  under  ten  years  of  age,  or  what  is  more 
usually  termed  infantile  assurance.  There  have  been  at  various  times 
attempts  made  to  excite  public  distrust  of  this  kind  of  assurance  by  the 
cry  that  such  assurance  is  an  incentive  to  child  murder.  This  cry  has  been 
sounded  more  frequently,  however,  in  England  than  here.  Inquiries  offi- 
cially made  in  England  have  shown  that  there  is  very  little  basis  for  the 
truth  of  any  such  statement.  While  it  is  possible  that  occasionally 
depraved  and  dissolute  parents  have  been  led  to  commit  child  murder  for 
the  sake  of  a  small  amount  of  assurance,  yet  such  cases  are  so  rare  as  to 
amount  to  nothing  when  the  large  number  of  children  so  assured  is  con- 
sidered. We  do  not  believe  that  in  this  country  it  would  be  possible  to 
substantiate  a  single  case  of  child  murder  as  resulting  from  this  cause.  On 
the  contrary,  however,  it  could  be  abundantly  shown  that  infantile  assur- 
ance has  done  a  world  of  good  among  the  poorer  classes.  Thousands  of 
children  are  assured  in  the  various  industrial  companies  for  small  amounts, 
and  this  is  regarded  in  the  light  of  a  burial  fund,  to  secure  for  the  child  in 
case  of  its  death  a  decent  Christian  burial.  There  is  nothing  the  poor  so 
dread  as  the  possibility  that  they  or  their  children  may  be  buried  in  Potter's 
Field  or  by  the  hand  of  charity.  Next  to  the  poor-house  a  pauper's  grave 
is  their  greatest  aversion.  They  therefore  hail  with  alacrity  this  form  of 
assurance,  which  provides  a  burial  fund  for  themselves  and  their  children, 
and  they  will  pinch  and  starve  themselves,  almost,  in  order  to  keep  this 
assurance  alive  by  the  payment  of  the  small  weekly  sums  required.  The 
agents  of  the  industrial  companies  tell  many  a  pitiful  tale  of  the  privations 
that  poor  families  endure  rather  than  default  in  the  payment  of  the  pre- 
mium which  secures  them  this  fund  to  save  them  from  a  pauper's  grave. 
It  is  so  small  on  the  average  as  to  preclude  the  possibility  of  its  being  a 
temptation  to  them  to  commit  murder,  much  less  a  murder  of  their  own 
offspring,  but  is  sufficient  to  secure  Christian  burial  in  case  of  death. 
President  Dryden,  of  The  Prudential  Insurance  Company  of  Newark,  and 
Vice-President  J.  R.  Hegeman,  of  the  Metropolitan,  with  others  representing 


'XjBRAflp' 
o*-  -fait 

UNIVERSITY 
&* 


/ 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  iSSg-'QI.      183 

industrial  assurance,  have  appeared  before  the  committee  and  given 
such  explanations  as  will  probably  result  in  the  defeat  of  the  bill.  Cer- 
tainly there  is  no  occasion  for  any  such  measure,  depriving  so  many 
thousands  of  this  highly -prized  form  of  insurance,  until  there  is  some 
evidence  that  it  has  been  abused,  as  has  been  so  frequently  suggested  but 
never  proven. 

The  Legislative  Committee  was  evidently  impressed  with  the 
plain  statement  of  the  facts  as  presented  by  the  Industrial  com- 
panies, and  after  a  full  hearing  no  further  action  was  taken.  It 
was  only  a  few  years  later  that  complete  legislative  sanction  was 
given  to  the  business  by  the  incorporation  of  a  table  into  the  new 
insurance  code  of  the  State,  fixing  the  maximum  amounts  which 
children  under  thirteen  years  could  be  insured  for,  in  a  manner 
practically  identical  with  the  methods  of  The  Prudential  and 
other  Industrial  companies. 

Daring  the  year  an  epidemic  of  la  grippe  caused  an  exces- 
sive mortality  among  the  general  population  and  proved  a  serious 
drain  on  the  funds  of  the  Industrial  companies.  A  large  num- 
ber of  claims  due  to  this  cause  were  paid  by  The  Prudential,  and 
corresponding  relief  was  afforded  to  large  numbers  who  would 
otherwise  have  been  compelled  to  rely  upon  public  or  private 
support  for  the  payment  of  medical  and  funeral  expenses. 

A  new  Industrial  company  was  organized  this  year  at  I/ouis- 
ville,  Ky.,  under  the  name  of  the  Sun  L,ife,  by  Mr.  M.  W.  Adams, 
formerly  connected  with  The  Prudential  Insurance  Company. 
The  new  company  was,  from  the  beginning,  under  energetic 
management,  and  has  succeeded  in  making  a  success  of  the  busi- 
ness, especially  among  the  white  population  in  the  Southern  States. 

A  vacancy  having  occurred  in  the  position  of  Secretary, 
Mr.  Forrest  F.  Dryden,  only  son  of  the  President  of  the  Com- 
pany, was  this  year,  under  date  of  October  loth,  elected  to  the 
identical  position  so  ably  filled  by  his  father  from  the  commence- 
ment of  the  Company's  business  operations  to  the  date  of  his 
election  to  the  Presidency.  For  the  purpose  of  obtaining  a 
thorough  training  in  the  field  service  of  the  Company,  Mr. 
Forrest  F.  Dryden  entered  one  of  the  Company's  districts  as  an 
Inspector  under  date  of  October  4,  1888,  and  in  the  usual  course 
obtained  his  promotion  to  a  Superintendency  under  date  of  Feb- 
ruary 4,  1889.  Having  shown  unusual  executive  ability,  Mr. 
Dryden,  on  January  14,  1890,  was  advanced  to  the  position  of 
Assistant  Secretary,  and,  on  October  10,  1890,  elected  to  the 


184  HISTORY  OF  THE   PRUDENTIAL. 

responsible  position  of  Secretary,  which  office  he  holds  at  the 
present  time. 

At  the  close  of  the  year  1890  The  Prudential  had  1,228,332 
Industrial  policies  in  force,  insuring  to  the  industrial  popula- 
tion an  amount  of  protection  in  excess  of  $135,000,000.  The 
financial  condition  of  the  Company  was  excellent,  the  surplus 
having  been  increased  to  $1,343,874.  The  relative  increase  in 
business  had  been  less  than  during  the  preceding  years,  partly 
on  account  of  the  continued  efforts  on  the  part  of  new  Industrial 
companies  to  interfere  with  the  business  of  The  Prudential  by 
improper  methods  and  unfair  competition.  These  difficulties, 
however,  were  gradually  overcome  as  the  nature  of  the  business 
and  the  elements  of  success  were  becoming  more  thoroughly 
understood  by  new  organizations  entering  the  field  of  Industrial 
insurance. 

As  an  evidence  of  the  efforts  on  the  part  of  the  managers  of 
The  Prudential  to  do  complete  justice  to  their  policy-holders,  as 
well  as  to  the  agents  of  the  Company,  a  new  scale  of  terms  to 
agents  was  issued  during  the  early  part  of  the  year,  indicative  of 
the  most  careful  consideration  of  all  the  interests  involved  in  the 
complex  question  of  adequate  agency  compensation.  The  table 
of  Industrial  rates  was  slightly  altered  in  that  weekly  premiums 
in  excess  of  twenty  cents  were  accepted  at  the  older  ages,  where 
occasionally  a  demand  was  made  for  a  policy  for  a  larger  sum 
than  could  be  insured  for  under  the  existing  table  of  rates.  Other- 
wise, the  table  of  rates  and  benefits  remained  the  same  as  estab- 
lished in  1887. 

During  the  year  1891  a  number  of  legislative  attempts  were 
made  to  disturb  the  business  of  the  Company  and  interfere  with 
the  practice  of  Industrial  insurance,  but,  as  a  rule,  the  plain 
statement  of  facts  supplied  by  the  companies  sufficed  to  meet 
the  objections  made  against  certain  details  connected  with  the 
business.  Kfforts  to  prohibit  the  insurance  of  children  were 
made  in  Illinois,  Massachusetts,  Ohio  and  New  Jersey,  but  not 
one  of  the  bills  introduced  for  this  purpose  became  a  law.  In 
New  Jersey  a  further  attempt  was  made  to  compel  Industrial 
companies  to  grant  surrender  values  after  two  years'  premiums 
had  been  paid,  while  in  the  State  of  Illinois  a  bill  was  intro- 
duced to  compel  insurance  companies  to  make  their  policies 
incontestable  after  six  months.  Neither  of  these  efforts  met 
with  success,  the  view  of  the  companies  prevailing,  that  should 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  iSSQ-'QI.       185 

experience  warrant  the  adoption  of  such  measures  the  companies, 
for  purely  commercial  reasons,  if  for  no  others,  would  on  their 
own  account  grant  such  privileges  as  the  condition  of  the  busi- 
ness would  warrant.  In  a  few  States  efforts  were  made  to  force 
Industrial  companies  to  grant  the  same  benefits  to  colored  persons 
as  those  granted  to  whites,  and  in  the  State  of  New  York  a 
bill  to  this  effect  passed  both  houses  of  the  Legislature.  The 
Spectator  of  February  5,  1891,  in  commenting  upon  the  pass- 
age of  this  bill,  well  said  that  "There  will  probably  be  less 
effort  on  the  part  of  agents  to  write  applications  on  colored 
lives,"  and  further  referred  to  the  subject  in  the  following 
well-timed  remarks  upon  the  bill  during  its  early  stage  in  the 
Assembly  : — 

A  bill  has  been  introduced  in  the  New  York  Senate,  having  in  view  the 
prevention  of  discrimination  by  life  assurance  companies  against  persons  of 
color,  and  is  similar  in  character  to  that  passed  by  the  Ohio  and  Massachusetts 
Legislatures.  Legislation  of  this  kind  is  harmful  in  the  extreme,  because 
it  defeats  its  own  end,  it  being  impossible  to  force  any  company  to  make 
a  bid  through  its  agents  for  colored  risks,  and  so  those  persons,  who 
would  otherwise  be  able  to  secure  assurance  at  rates  equitably  adjusted  to 
the  greater  mortality  which  statistics  show  prevails  among  individuals  of 
African  extraction,  are  practically  debarred  from  its  advantages,  because  no 
agent  will  solicit  them  for  assurance  if  his  company  is  compelled  to  grant 
a  contract  in  which  the  terms  are  so  manifestly  against  them.  The  color 
line  is  not  drawn  simply  because  the  applicants  are  negroes — the  world  is 
too  progressive  for  that — but  a  distinction  is  made  on  account  of  the  fact  that 
companies  can  not  afford  to  grant  policies  at  the  same  rates  to  colored  as  to 
white  applicants,  and  any  legislation  which  is  intended  to  force  them  so  to 
do  is  practically  tyrannous.  Fire  insurance  companies  are  not  prohibited 
from  charging  higher  premiums  on  frame  than  brick  or  stone-built  prop- 
erties, and  yet  they  are  in  just  the  same  position  as  life  assurance 
companies  that  adjust  the  difficulty  of  increased  mortality  amongst 
negroes,  by  fixing  a  rate  at  which  they  can  safely,  and  with  equal  chance 
of  profit  as  from  whites,  grant  them  assurance.  There  is  no  more  sense 
in  passing  such  a  bill  as  referred  to  than  there  would  be  in  passing 
one  to  prevent  life  assurance  companies  rejecting  applicants  who  were 
consumptives. 

The  business  year  of  1891  had  been  satisfactory  to  the  man- 
agers of  The  Prudential,  showing  a  fair  increase  in  the  Ordinary 
branch,  while  in  the  Industrial  branch  1,360,000  contracts  were 
in  force  at  the  close  of  the  year.  The  Company  was  taking 
its  time  in  the  writing  of  new  business,  more  serious  attention 
being  given  to  the  improvement  of  the  condition  of  the  business 


l86  HISTORY   OF  THE   PRUDENTIAL. 

already  on  its  books.  This,  in  the  practice  of  Industrial  insur- 
ance, is  a  most  important  factor  and  element  of  success,  and  no 
Industrial  company  has  shown  more  solicitude  towards  its  per- 
sistent policy-holders  than  The  Prudential,  and  to  the  Company's 
sense  of  equity  and  fairness  must  be  attributed  a  large  degree  of 
its  wonderful  success  not  only  during  the  early  years  of  business 
operations,  but  much  more  so  during  more  recent  times. 


THE;  PRUDENTIAL  INS.  co.  OF  AMERICA,  i892-'93.     187 


CHAPTER  XII. 

THE   PRUDENTIAL   INSURANCE   COMPANY  OF  AMERICA, 
1892-1893. 

The  new  year  1892  was  destined  to  prove  a  most  important 
one  in  the  annals  of  Industrial  insurance.  The  Prudential  Insur- 
ance Company  this  year  issued  a  new  Industrial  policy,  which 
contained  a  provision  granting  paid-up  insurance  to  its  policy- 
holders  after  the  premiums  had  been  paid  for  a  period  of  five 
years.  A  circular  letter  to  the  agents  and  policy-holders  explain- 
ing this  voluntary  concession  on  the  part  of  the  Company  was 
issued  under  date  of  January  i,  1892,  from  which  I  make  a  brief 
quotation  :— 

The  first  of  our  new  Plans  is  the  addition  of  a  Paid-up  Policy  Clause  to 
the  present  forms  of  Industrial  contracts.  The  paid-up  clause  will  be  oper- 
ative after  five  years'  premiums  have  been  paid  on  the  original  policy. 
The  amount  of  the  paid-up  policy  at  the  end  of  a  certain  number  of  years 
is  plainly  indicated  in  a  table  which  will  be  printed  on  the  back  of  each 
Industrial  policy  issued  after  the  first  of  January,  1892.  The  amounts  in 
the  table  are  computed  according  to  the  New  York  Non-forfeiture  Law, 
which  is  used  by  the  New  York  State  companies  in  computing  paid-up 
policies  under  Ordinary  Whole-Life  contracts.  The  paid-up  policy,  as  its 
name  indicates,  is  not  subject  to  the  payment  of  any  premiums,  and  will  be 
paid  in  event  of  the  death  of  the  person  insured,  provided  it  occurs  within 
the  period  of  his  (or  her)  Expectation  of  Life  at  the  time  the  paid-up  policy 
is  taken  out. 

The  Company  has  further  to  announce  that  all  policies  at  present  out- 
standing will  be  entitled  to  a  paid-up  concession,  after  five  years  from  this 
date  ;  or,  in  other  words,  whether  they  contain  a  paid-up  clause  or  not,  will 
be  entitled  to  a  paid-up  concession. 

In  commenting  upon  the  liberal  policy  of  The  Prudential, 
the  Insurance  Monitor,  under  date  of  January  2,  1892,  voiced 
the  unanimous  opinion  of  the  insurance  press  in  the  following 
words : — 

The  opening  of  the  new  year  marked  an  important  step  in  advance  in 
industrial  insurance.  To  the  Prudential  must  be  given  the  credit  of 


1 88  HISTORY  OF  THE   PRUDENTIAL. 

inaugurating  the  new  departure.  Hereafter  surrender  values  in  the  form 
of  paid-up  policies  will  be  granted  to  all  applicants  above  the  age  of  thirteen 
whose  contracts  have  run  for  five  years,  such  policies  to  run  for  the  term  of 
their  life  expectation. 

The  great  importance  of  this  voluntary  concession  lies  in  the  fact  that 
it  anticipates  and  effectually  meets  what  might,  in  the  near  future,  prove  a 
serious  menace  to  the  business.  Industrial  insurance  has  its  stronghold 
among  the  masses,  whose  political  influence  is  all  powerful.  Sooner  or  later 
a  legislative  agitation  would  have  been  started  in  the  ostensible  interest  of 
the  poor  man  to  compel  surrender  values.  The  matter  would  have  been  in 
the  hands  of  incompetent  legislators,  whose  notions  of  surrender  values 
would  be  in  all  likelihood  damaging  to  the  best  interests  of  the  business. 
The  action  of  the  Prudential  will  almost  inevitably  be  followed  by  the  rest, 
and  there  will  be  no  occasion  for  legislative  interference.  In  fact,  since 
writing  the  above  we  have  learned  that  the  Metropolitan  and  one  or  two 
other  companies  expect  to  take  a  similar  step. 

But  we  suggest  to  all  the  companies  that  they  act  in  harmony  in  this 
matter.  Industrial  insurance  is  still  in  its  early  stages,  and  it  would  be 
exceedingly  unwise  to  inaugurate  a  competition  as  to  which  can  promise 
the  largest  benefits  to  be  piled  up  as  a  future  liability. 

I  can  not  omit  a  further  tribute  to  the  Company  and  its  liberal 
policy  towards  its  policy-holders,  as  additional  evidence  of  the 
ready  recognition  of  The  Prudential's  sense  of  justice  in  dealing 
with  its  patrons,  and  its  sense  of  prudence  in  dealing  with  a 
problem  which  required  for  its  successful  solution  and  settlement 
not  only  the  highest  actuarial  skill,  but  also  an  experience  which 
could  be  furnished  only  by  the  actual  business  operations  of 
the  Company.  The  following  reference  to  The  Prudential 
appeared  in  the  American  Exchange  and  Review  of  April,  1892, 
having  been  copied  from  the  Philadelphia  Intelligencer  :— 

It  appears  to  have  been  a  very  difficult  matter  to  introduce  the  feature 
of  surrender  values  in  industrial  life  insurance  in  this  country.  In  the  first 
place,  the  amounts  of  the  industrial  policies  are  so  small  that  even  the 
most  liberal  allowances  as  surrender  values  would  be  represented  by  such 
insignificant  amounts  of  paid-up  insurance,  or  for  so  short  extensions  to 
the  life  of  lapsed  policies  as  to  leave  but  very  little  life  insurance  benefit 
remaining  to  the  assured.  But  the  principal  difficulty  in  this  matter,  no 
doubt,  has  been  the  exceedingly  high  proportion  of  cost  that  must  accom- 
pany the  granting  of  surrender  values  or  extensions  in  industrial  life  insur- 
ance. The  trouble  and  expense  consequent  upon  extending  the  time  or  in 
granting  paid-up  surrender  values  on  a  policy  for  but  $50,  generally  speak- 
ing, is  as  great  as  for  a  policy  of  $50,000 ;  from  this  it  can  be  judged  that, 
while  the  ratio  of  expense  attending  surrender  values,  etc.,  in  a  business 
of  policies  for  large  amounts  is  hardly  appreciable,  yet  such  similar  amounts 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  1892-^93.       189 

of  expense  attending  the  granting  of  surrender  values,  etc.,  on  the  exceed- 
ingly small  amounts  in  industrial  insurance,  would  pretty  much  swallow 
all  up  in  the  cost.  Nevertheless,  industrial  insurance  in  itself  is  possibly 
the  greatest,  as  it  is  the  grandest  representation  of  the  important  results 
that  have  been  obtained  by  "  attention  to  small  things  "  ;  so,  on  this  very 
account,  it  has  looked  something  like  a  reproach  against  the  industrial 
life  insurance  companies  that  they  have  not  granted  surrender  values  or 
extensions  on  lapsed  policies,  no  matter  how  small  such  paid-up  amounts 
or  how  short  the  periods  of  the  extension  of  the  life  of  the  policies  these 
concessions  would  result  in.  However,  The  Prudential  Company  of  Newark, 
with  its  twenty  years  of  the  largest  experience  as  to  the  possibilities  of 
industrial  insurance,  has  carefully  considered  the  difficulties  of  granting 
surrender  values  in  this  branch  of  the  business,  and  finding,  in  its  case  at 
least,  this  concession  could  be  made  to  its  patrons,  has  incorporated  it  in 
all  its  policies  of  five  years'  standing  ;  and  if  this  may  be  considered  a  long 
time  before  a  surrender  value  can  be  earned,  nevertheless  this  action  of 
The  Prudential  is  exceedingly  valuable  as  an  example  that  no  doubt  will  be 
influential  in  bringing  about,  in  the  industrial  branch,  the  study  and  allow- 
ance of  all  that  can  be  permitted  in  this  important  matter,  and  therefore  it 
is  due  the  ' '  Prudential ' '  that  it  should  be  given  all  the  credit  belonging  to 
the  industrial  company  first  to  introduce  the  important  feature  of  ' '  sur- 
render values  "  in  the  industrial  life  policy. 

Still  another  decided  step  in  advance  was  taken  this  year  by 
The  Prudential,  in  that  an  Industrial  Endowment  policy  was 
placed  on  the  market,  reference  to  which  was  made  in  Mr. 
Dryden's  letter  of  January  ist,  as  follows  : — 

The  second  departure  is  the  addition  of  Endowment  Policies  to  the 
forms  of  contracts  now  issued  by  the  Industrial  branch  of  the  Company. 
Policies  will  be  issued  payable  at  the  end  of  15,  20,  25  or  30  years,  or  at 
death,  if  prior  to  the  end  of  the  period  selected.  Circulars  are  sent  you 
herewith,  showing  the  amount  of  the  policy  that  may  be  purchased  by  a 
certain  weekly  premium. 

Endowments  will  also  be  entitled  to  paid-up  policies  after  five  years' 
premiums  have  been  paid.  The  amount  of  the  paid-up  will  be  in  propor- 
tion to  the  number  of  premiums  paid  on  the  policy.  For  example,  if  the 
Endowment  is  for  $1,000  and  for  15  years,  the  paid-up  policy  after  five 
years  will  be  for  one-third  of  the  face  value  of  the  policy — after  ten  years, 
for  two-thirds  of  the  face  of  the  policy. 

The  question  of  Industrial  Endowments  had  been  discussed 
for  a  number  of  years  in  the  insurance  journals,  but  it  was  one 
which  required  for  its  proper  treatment  years  of  experience.  The 
subsequent  experience  with  this  class  of  policies  has  proven  that 
Endowments,  in  the  true  sense  of  the  word,  and  in  a  practical 


HISTORY  OF   THE   PRUDENTIAL. 

form,  are  hardly  possible  under  the  existing  conditions  of  the 
Industrial  method  of  insurance.  In  Endowment  insurance  a 
large  part  of  the  premium  represents  an  investment  feature, 
which  can  hardly  find  a  place  in  an  Industrial  policy,  providing 
first  for  the  payment  of  funeral  expenses  and  the  cost  of  the  last 
illness.  The  increased  cost  of  Endowment  insurance  must  neces- 
sarily at  all  times  prove  a  serious  hindrance  to  success,  while,  on 
the  other  hand,  it  may  be  argued  that  it  is  not  desirable  that 
the  primary  purpose  of  Industrial  insurance  should  be  defeated 
by  a  secondary  one,  which  would  often  be  the  case  were  the 
amounts  receivable  to  be  paid  to  the  insured  during  his  or  her 
life-time,  and  which,  being  small,  would  rapidly  be  consumed  for 
living  expenses,  leaving  little  or  nothing  at  death  to  meet  the 
cost  of  burial  and  last  illness. 

Immense  and  permanent  progress  had  been  made  in  the  ex- 
tension of  insurance  principles  to  the  masses.  Millions  were  now 
insured  who,  previous  to  the  advent  of  Industrial  insurance,  had 
not  even  a  conception  of  insurance  principles  and  practice,  and 
millions  had  been  provided  for  by  a  policy  adequate  to  meet  the 
objects  for  which  the  business  had  been  established. 

Few  writers  on  Life  Insurance  Progress  have  recognized  this 
development  of  life  insurance  more  clearly  than  Mr.  D.  N.  Holway, 
who,  in  an  article  in  the  Arena  of  1892,  referred  to  Industrial 
insurance  as  follows  : — 

It  forms  the  A,  B,  C  of  American  Life  Insurance.  All  the  members 
of  a  family  insure  each  for  a  small  amount  secured  by  weekly  payments. 
In  this  way  they  mutually  protect  each  other.  The  amount  of  death 
claims  paid  under  this  form  of  insurance  in  1891  was  $7,725,000  upon 
63,900  policies.  Aside  from  the  direct  and  incalculable  benefit  which 
the  bestowal  of  this  large  amount  among  so  many  households  afforded,  the 
educational  process  whereby  this  vast  number  of  people  (over  4,000,000)  are 
taught  the  value  of  self-sacrifice  for  the  benefit  of  others,  and  to  fully  real- 
ize that  there  is  a  system  whereby  they  can  surely  do  it,  is  of  immeasurable 
value  to  the  future  of  the  republic.  Instead  of  being  a  blind  force  of  un- 
educated power,  they  become  conservatives  because  they  represent  prop- 
erty.* They  range  themselves  on  the  side  of  law  and  order.  To  many  of 
them  is  thus  exemplified  for  the  first  time  the  beautiful  sentiment  that 


*  It  may  not  be  out  of  place  here  to  recall  a  passage  in  Mr.  Mackay's 
book,  ''The  Knglish  Poor,"  in  which  this  tendency  of  the  wage-earning 
masses  towards  economic  independence  is  fully  and  ably  set  forth:  "The 
first  lesson  in  thrift,  the  first  inducements  to  rely  on  property,  the  first 


PRESENT   HOME-OFFICE    BUILDINGS   OF 

THE  PRUDENTlAlv  INSURANCE  COMPANY  OF  AMERICA 
FIRST   OCCUPIED,   MAY    I,    1892. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  1892-9$.      IQI 

has  come  down  the  centuries,  "Bear  ye  one  another's  burdens,"  and  they 
find  pleasure  in  expressing  it  in  this  practical  way.  As  these  persons  rise 
in  the  social  scale  and  become  supervisors,  inventors  and  proprietors  in  the 
world's  great  affairs,  they  will  increase  their  insurance,  and  thus  become 
patrons  in  an  enlightened  sense  of  the  companies  which  practice  the  ordi- 
nary methods.  There  is  therefore  no  clashing  of  interests  between  the 
two  plans  of  conducting  the  business,  but  rather  a  mutual  helping  of  each 
other  forward  toward  an  ever  enlarging  success. 

Largely  no  doubt  in  consequence  of  the  liberal  concessions 
made  to  its  policy-holders  and  the  consequent  material  improve- 
ment in  the  Industrial  contract  as  a  permanent  form  of  insurance 
protection,  The  Prudential  made  exceptional  progress  in  new 
business  during  the  year  1892.  The  net  increase  in  Industrial  poli- 
cies in  force  reached  almost  300,000,  equal  to  21.6  per  cent,  over 
the  preceding  year.  The  total  number  of  Industrial  policies  had 
reached  1,653,465,  while  in  the  Ordinary  department  8, 120  policies 
were  in  force.  In  the  finances  of  the  Company  corresponding 
progress  had  been  made,  and  the  surplus  to  policy-holders  now  ex- 
ceeded $2,200,000.  The  successful  ending  of  the  year's  business 
operations  proved  a  fitting  climax  to  the  removal  of  the  home 
office  from  the  building  which  it  had  occupied  since  1883  to  the 
new  home-office  building  on  the  corner  of  Broad  and  Bank  streets. 
Unknown  as  a  business  method  less  than  seventeen  years  before, 
The  Prudential  had  developed  Industrial  insurance  to  such  an 
extent  that  by  1892  the  largest  office  building  in  the  State  of 
New  Jersey  was  required  for  transacting  the  business  of  the 
Company.  In  honor  of  the  event  a  celebration  took  place  during 
the  latter  part  of  November,  referred  to  in  the  Standard  of  Boston, 
under  date  of  December  3,  1892,  in  the  following  words  : — 

The  Prudential  Life  Insurance  Company  of  Newark  gave  a  treat  to  its 
agents  located  within  a  radius  of  100  miles  of  the  home  office  Thursday  and 
Friday.  The  affair  was  in  the  nature  of  a  house-warming,  the  first  since 


motives  to  refrain  from  consuming  wages  on  the  day  they  are  earned,  arise 
from  the  desire  of  men  to  provide  against  the  uncertainties  of  an  unknown 
morrow,  and  for  the  inevitable  period  of  sickness  and  old  age.  Our  poor 
law  and  the  ubiquitous  philanthropist  have  done  their  best  to  prevent  the 
poor  man  from  the  necessity  of  yielding  to  this  desire.  *  *  *  *  But 
the  individualistic  instinct  is  not  so  easily  killed,  and  notwithstanding  the 
snare,  there  is  among  the  poor  a  latent,  steady  and  withal  effectual  tendency 
to  return  to  the  true  type  of  individual  independence  and  self-assertion." 
(P-  I3-) 


HISTORY  OF  THE   PRUDENTIAL. 

the  Company's  building  on  Broad  street  had  been  occupied.  The  festivities 
were  inaugurated  with  a  banquet  at  Delmonico's  Thursday  night,  at  which 
all  the  officers  and  their  immediate  attaches  participated. 

The  influx  of  agents  did  not  begin  from  the  suburban  districts  until 
yesterday  morning,  and  by  n  o'clock  there  were  fully  two  thousand  sta- 
tioned in  front  of  the  Broad  street  edifice,  having  been  brought  to  the  city 
by  the  early  trains.  The  insurance  excursionists  were  primed  for  a  good 
time,  having  fine  military  bands  with  them  that  served  to  arouse  all  Newark 
within  a  distance  of  three  miles  of  the  Prudential  office.  After  an  inspec- 
tion of  the  building,  during  which  President  Dryden  addressed  the  visitors 
from  the  monster  balcony  within  that  overlooks  the  entire  office  on  the 
ground-floor,  the  agents  were  ordered  to  fall  in  and  the  march  was  taken 
up  to  Saenger-Fest  Pavilion  in  Caledonian  Park.  On  the  way  they  were 
reviewed  by  Mayor  Haynes.  The  agents  sat  down  to  an  elaborate  ox-roast 
on  reaching  their  destination.  Another  speech  was  made  by  President 
Dryden  at  the  park  after  the  repast,  and  the  delegates  returned  to  their 
homes  in  the  evening  pronouncing  the  affair  a  monster  success. 

The  proportions  which  the  business  of  The  Prudential  had 
assumed  by  January  i,  1893,  made  it  not  only  desirable  but 
necessary  that  the  capital  stock  of  the  Company  should  be  con- 
siderably increased.  Accordingly  during  the  early  part  of  the 
year  new  stock  was  issued,  which  increased  the  capital  of  the 
Company  to  $2,000,000. 

In  compliance  with  a  distinct  demand  the  Company  this  year 
through  its  Ordinary  department  placed  a  Child's  Endowment 
policy  on  the  market,  to  enable  parents  to  make  a  provision  for 
the  education,  support  or  assistance  of  children  at  the  age  of 
eighteen  years  and  over.  Similar  efforts  had  previously  been 
made  in  this  direction  in  this  country,  but  no  substantial  results 
had  been  attained.  As  far  back  as  1853,  Dr-  H.  J.  Tilt  had 
discussed  the  question  of  life  insurance  for  children  at  consider- 
able length  and  furnished  tables  of  rates  which,  no  doubt,  were 
adopted  by  some  of  the  companies  transacting  insurance  at  that 
time,*  but  the  inherent  difficulties  in  making  Child's  Endowments 
applicable  to  the  Industrial  population  are  such  that  it  is  doubtful 
whether  this  form  of  insurance  is  ever  likely  to  become  very 
popular  in  this  country.  The  Child  Endowment  policies  of  The 
Prudential  are  issued  for  sums  as  low  as  $100,  with  premiums 
payable  quarterly,  semi-annually  and  annually. 


*  Elements  of  Health,  and  Principles  of  Female  Hygiene,  pp.  134, 135. 
Lindsay  &  Blakiston,  Philadelphia,  1853. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l892-'93-       193 
CHILD'S  ENDOWMENT.     (WiTH  INTEREST.) 
PREMIUM  RATES  PER  fioo. 

Amount  of  Policy  -with  profits  payable  at  age  stated,  and  all  Premiums 
returned  WITH  FOUR  PER  CENT.  COMPOUND  INTEREST  in  event  of 
previous  death. 


PAYABLE  AT  AGE  18. 


AGE  NEAREST 
BIRTHDAY. 

ANNUAL. 

SEMI-ANNUAL. 

QUARTBRLY. 

I 

$5  08 

$264 

$    35 

2 

5  49 

285 

i  46 

3 

5  96 

3  10 

58 

4 

6  50 

338 

72 

5 

7  12 

3  70 

89 

6 

7  85 

4  08 

2   08 

7 

8  71 

4  53 

2   31 

8 

9  75 

5  07 

258 

In  the  event  of  the  death  of  the  child  before  the  expiration  of  the 
Endowment  period,  all  the  premiums  paid  on  the  policy  are  returned  to 
the  parent  or  guardian  with  compound  interest  at  the  rate  of  four  per  cent. 

In  compliance  with  a  request  from  the  United  States  Review 
of  Philadelphia,  Mr.  Dry  den  this  year  contributed  a  valuable 
and  interesting  paper  on  "  Industrial  Insurance  as  an  Educator," 
The  article  is  too  long  to  be  reproduced  in  full,  but  the  essential 
points  are  brought  out  in  the  following  quotations  : — 

Industrial  insurance  does  not  cease  its  efforts  for  the  education  of  the 
people  at  the  time  when  the  policy  is  taken,  for  it  must  be  remembered 
that  the  premium  is  not  sent  to  the  Company  by  the  insured,  but  that  the 
agent  calls  at  the  house  of  the  policy-holder  week  after  week.  This  tends  to 
keep  the  subject  before  the  mind,  and  very  frequently  questions  are  asked 
and  the  subject  is  broached  by  neighbors  who  are  calling  at  the  time  the 
collector  is  announced,  and,  moreover,  the  literature  of  the  Company  is 
left  regularly  as  the  agent  calls,  so  that  the  person  is  kept  informed  in 
regard  to  the  various  phases  of  life  insurance,  the  different  arguments  for 
it,  illustrations  of  its  value,  and  also  of  the  disadvantages  of  being  without 
it ;  so  that  the  tendency  is  to  continually  deepen  the  impression  which  was 
made  at  the  time  the  policy  was  taken. 

One  feature  of  this  work  merits  particular  attention,  namely,  its  effect 
upon  the  young.  In  consequence  of  the  industrial  agent's  work,  boys  and 
girls  grow  up  in  an  atmosphere  of  insurance.  They  come  to  look  upon  it 


194  HISTORY  OF  THE   PRUDENTIAL. 

as  a  matter  of  course  ;  to  think  of  it  as  something  to  be  provided,  the  same 
as  every  other  necessary  of  life,  regularly  arid  constantly.  They  hear  the 
subject  discussed  by  their  parents  after  the  agent  has  called  ;  they  know 
when  a  decision  is  reached  and  in  many  cases  understand  that  it  involves 
self-denial,  and  they  appreciate  its  importance  accordingly.  They  see  the 
policy  and  premium  receipt-book  and  know  what  they  are  ;  and  they  see 
the  money  paid  out.  In  answer  to  innumerable  questions  the  parents 
explain  to  them  the  reasons  for  the  outlay  and  the  advantages  of  it ;  and 
this  is  done,  not  in  the  parlance  of  the  agent,  but  in  the  language  of  the 
parent,  which  is  the  expression  of  a  mode  of  thought  very  little  different 
or  but  slightly  removed  from  that  of  the  child.  Thus,  the  boy  or  girl 
involuntarily  and  intuitively  imbibes  insurance. 

It  may  be  said  that  this  process  of  education  is  confined  to  a  certain 
class,  and  that  it  is  circumscribed  in  its  influence ;  that  it  works  amongst 
those  whose  surroundings,  mode  of  life  and  limited  sphere  in  which  they 
move  make  it  impracticable,  if  not  impossible,  for  them  to  do  much 
towards  extending  the  education  thus  gained.  This  is  not  the  country  in 
which  to  hold  such  a  theory.  It  is  here  that  the  poor  boy  of  to-day  becomes 
the  millionaire  of  a  few  years  hence ;  that  the  cabin  of  the  canal-boat  is 
exchanged  for  the  White  House,  and  the  rail-splitter  becomes  President. 
The  history  of  this  country  teaches,  as  clearly  as  anything  else,  that  the 
masses  amongst  which  the  work  of  Industrial  insurance  is  done  produce 
many  men  who  are  a  power  in  society.  There  are  boys  who  are  now  in 
families  where  industrial  policies  are  held,  some  of  them  carrying  insurance 
on  their  own  lives,  who  are  fast  approaching  the  editorial  chair,  and  it  will 
not  be  very  long  before  some  of  those  who  are  now  taking  their  first  lesson 
in  insurance  from  an  industrial  policy  and  premium  receipt-book,  will  be 
seated  in  the  State  Legislatures  or  in  the  halls  of  Congress. 

This  view  of  Mr.  Dryden  is  fully  supported  by  the  increasing 
popularity  of  the  system  of  Industrial  insurance  among  the 
new  generation  who  have  become  familiar  with  this  form  of 
insurance  during  their  earliest  infancy,  and  perhaps  in  no  case 
has  the  educational  value  of  Industrial  insurance  been  more 
fully  recognized  than  in  the  article  of  Mr.  Holway  in  the  Arena, 
where  he  properly  refers  to  it  as  the  "A,  B,  C"  of  American 
life  insurance. 

These  views  found  their  further  support  in  the  very  con- 
siderable progress  that  had  been  made  by  Industrial  companies 
in  the  Ordinary  field.  The  larger  proportion  of  Ordinary  risks 
on  the  books  of  Industrial  companies  represent  a  class  of  people 
who  would  not  generally  be  solicited  by  the  agents  of  regular 
Ordinary  companies.  To  illustrate  this  fact  I  may  state  that 
the  average  amount  of  an  Ordinary  policy  written  by  the  three 
leading  Ordinary  life  companies  during  1898  was  $2, 138  against  an 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l892-'93-       195 

average  policy  of  only  $1,120  written  by  The  Prudential  in  its 
Ordinary  department.  That  this  extension  of  Ordinary  insurance 
principles  to  the  masses  is  the  direct  result  of  Industrial  insurance 
will  not  be  questioned  by  any  experienced  life  underwriter. 

The  commercial  and  financial  depression  of  the  year  1893 
brought  about  such  widespread  distress  among  the  wage-earning 
population  in  consequence  of  the  numerous  failures  and  the  stop- 
page of  work  in  a  large  number  of  industries  that  it  was  but  natural 
to  expect  that,  among  those  insured  with  Industrial  companies, 
many  would  find  it  difficult  to  pay  the  weekly  premiums  on  their 
Industrial  policies.  As  soon  as  the  gravity  of  the  problem 
became  apparent,  steps  were  taken  by  The  Prudential  to  miti- 
gate the  inevitable  distress  as  far  as  it  was  possible  for  the 
Company  to  do  this  in  justice  to  the  best  interests  of  all  the 
policy-holders  and  the  future  welfare  of  the  Company.  Accord- 
ingly, under  date  of  November  i,  1893,  a  circular  letter  was  issued 
by  the  Company  over  the  signature  of  Mr.  Dryden,  in  which  lapsed 
policy-holders  were  granted  concessions  without  a  parallel  in  life- 
insurance  history.  The  circular  letter  is  referred  to  at  length  in 
an  article,  in  which  the  most  important  sections  were  incorporated, 
in  the  Baltimore  Underwriter  under  date  of  November  20,  1893, 
and  which  I  therefore  quote  in  full : — 

Under  the  operation  of  the  forfeiture  system  in  case  of  lapses  of  policies 
for  non-punctual  payment  of  premiums,  so  much  hardship  was  occasioned, 
that  the  life  companies  were  forced  by  public  complaint  to  adopt  more 
liberal  measures.  Enforcement  of  the  stipulations  of  an  iron-clad  contract, 
though  strictly  legal,  was  not  considered  by  the  sufferers  as  even-handed 
or  equitable.  It  might  be  just,  but  it  was  anything  but  generous.  Hence 
the  non-forfeiture  features  which  have  been  conceded  from  time  to  time, 
and  which  have  abolished  the  provisions  and  restrictions  to  which  reason- 
able objection  was  made. 

In  line  with  this  growth  of  liberal  spirit,  and  in  view  of  the  straitened 
and  pinched  condition  of  the  great  army  of  the  unemployed  during  a  long 
period  of  financial  stringency,  of  closure  of  mills  and  factories,  and  of 
strikes  against  reduction  of  wages,  The  Prudential  Insurance  Company  of 
America  has  issued  a  very  important  and  noteworthy  circular,  a  copy  of 
which  will  be  found  on  another  page.  The  constituency  of  industrial  in- 
surance is  mainly  drawn  from  the  humble  classes  of  life,  to  whom  in  a 
period  of  non-employment  the  payment  of  five  or  ten  cents  a  week  out  of 
slender  savings  may  mean  serious  privation.  When  the  savings  are  ex- 
hausted and  no  wages  coming  in,  they  are  obliged  to  lapse  their  policies, 
and  lose  thereby  the  provision  made  for  the  rainy  day.  With  the  experi- 
ence before  them  of  such  sad  results  of  hard  times,  the  managers  of  the 


196  HISTORY   OF   THE   PRUDENTIAL. 

Prudential  have  come  forward  to  befriend  distressed  policy-holders  in  the 
most  effective  way.     Three  concessions  are  made  as  follows  : — 

1.  If  the  policy  has  been  in  force  as  an  "adult  policy  "  for  five  years  or 
more  at  the  time  premiums  ceased  to  be  paid,  a  paid-up  policy  will  be 
granted  in  accordance  with  the  terms  and  conditions  of  the  provision  for 
paid-up  policies  published  on  the  back  of  "  regular  industrial  "  policies  now 
issued  by  the  company. 

2.  In  lieu  of  the  foregoing,  policy-holders  who  have  paid  premiums  for 
one  full  year  or  more  at  the  time  of  lapse  may  take  out  a  new  policy  at 
the  present  age,  and  the  same  will  be  p.ut  in  full  immediate  benefit. 

3.  Proofs  of  death  may  be  filled  out  and  submitted  in  the  usual  way  in 
any  case  of  death  happening  between  June  ist  last  and  November  6,  1893, 
if  policy  has  been  in  force  for  five  years  or  more  on  the  life  of  the  insured 
and  has  been  lapsed  since  June  ist  last,  in  consequence  of  the  hard  times. 
If  the  claim  is  correct  in  every  respect,  except  with  regard  to  the  policy 
being  lapsed  for  the  cause  aforesaid,  it  will  be  recognized  and  paid  in  ac- 
cordance with  the  terms  and  conditions  of  the  provision  for  paid-up  policies 
heretofore  referred  to. 

These  offers  of  restoration  will  not  only  be  welcome  to  the  thrifty  on 
the  lapse  list,  who  can  ill  afford  to  lose  what  they  have  paid  in,  and  who 
feel  keenly  such  deprivation  of  the  provision  against  future  contingen- 
cies, but  they  will  be  hailed  with  satisfaction  by  all  who  are  interested 
in  the  successful  working  of  the  industrial  insurance  system,  which  they 
regard  as  virtually  and  substantially  the  best  form  of  "  organized  charity  " 
yet  devised.  Not  the  least  in  gratitude  to  the  managers  will  be  the  field 
workers,  for  the  double  reason  that  it  will  give  them  especial  pleasure  to 
engage  in  the  work  of  restoration,  and  that  it  will  give  them  a  handle  and  im- 
petus in  canvassing  for  new  business,  the  value  of  which  is  beyond  estimate. 

The  value  of  these  important  concessions  can  not  be  esti- 
mated in  mere  dollars  and  cents.  It  far  exceeds  the  actual 
cost  of  these  concessions  to  the  Company  which  was  liberal 
enough  to  make  them,  for  they  have  done  much,  if  not  most,  to 
make  clear  to  policy-holders  and  the  outside  world  that,  although 
The  Prudential  is  not  a  charitable  or  philanthropic  agency  in  the 
sense  that  these  terms  are  usually  understood,  it  is  nevertheless 
a  Company  ready  to  deal  liberally  and  equitably  with  its  policy- 
holders  to  the  extent  of  its  ability  in  an  hour  of  emergency  or 
need.  It  would  be  easy  to  fill  pages  with  letters  of  gratitude 
which  reached  the  Company  in  large  numbers,  expressing  the 
appreciation  of  those  who,  contrary  to  their  expectations,  did  not 
forfeit  their  insurance  in  consequence  of  the  critical  times  during 
the  latter  part  of  1 893  and  the  early  part  of  1 894. 

I  can  not  do  better  than  quote  from  the  New  York  Insur- 
ance Journal  for  November,  1893,  tne  statement  that — "When 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l892-'93.      197 

we  consider  the  magnitude  of  the  concession,  which  may  embrace 
many  thousand  policy  holders,  so  widespread  is  what  we  may 
term  industrial  idleness,  that  the  proposition  may  be  well  de- 
scribed as  unexampled  in  the  history  of  life  insurance,  and 
probably  reaches  that  extreme  of  security  that  is  compatible 
with  the  fundamental  principle  upon  which  the  institution  is 
founded ,  that  of  reproductiveness  and  self-support.  But  under  the 
pressure  of  such  circumstances,  and  in  behalf  of  such  a  clientele, 
we  question  if  sentiment  would  be  open  to  reproach  should  it  be 
found  to  have  made  a  slight  trespass  upon  actual  foresight. ' ' 

At  the  time  when  the  concession  was  made  the  Company 
hardly  expected  the  financial  stringency  to  continue  as  long  as 
subsequent  experience  proved  to  be  the  case,  and  hence  an  ex- 
tension of  the  concession  was  made  necessary  under  date  of 
December  loth,  and  communicated  to  the  public  and  the  field 
force  in  the  following  words  : — 

The  first  of  the  concessions  of  November  i,  1893,  gave  to  the  holders  of 
Adult  policies  on  which  the  premiums  had  been  paid  for  five  or  more  years 
the  privilege  of  applying  for  a  Paid-up  policy,  in  accordance  with  the  terms 
and  conditions  of  the  provision  for  Paid-up  policies  printed  on  the  back  of 
the  present  Regular  Industrial  policies  of  the  Company.  Until  further 
notice  this  concession  will  be  continued  by  the  Company. 

If  ever  an  unwarranted  charge  had  found  its  own  refutation 
it  was  true  in  this  case.  The  accusation  which  had  so  often  been 
brought  against  Industrial  insurance  companies,  namely,  that  they 
desired,  encouraged  and  profited  by  lapses,  was  here  disproved  by 
the  practice  of  The  Prudential,  which  did  all  that  in  safety  could 
be  done  to  reinstate  lapsed  policy-holders  and  to  make  forfeitures, 
which  could  possibly  be  avoided,  unnecessary  by  a  prudent 
liberality.  This  view  was  so  well  expressed  in  an  article  in  the 
Weekly  Underwriter  of  November  u,  1893,  t^at  I  can  n°t  do 
better  than  conclude  these  references  to  the  concessions  of  1893 
with  the  following  quotation  :— 

No  business  can  long  endure  which  takes  advantage  of  technicalities 
to  grind  the  face  of  the  poor.  While  life  insurance  can  not  be  conducted 
without  premiums,  and  while  rules  must  be  maintained  which  are  known  to 
be  sound  business  rules  in  ordinary  times,  there  are  exigencies  in  the  lives 
of  individuals  and  corporations,  when  the  highest  regard  for  the  welfare 
of  each  demands  a  temporary  departure  even  from  principles  which  are 
regarded  as  fundamental.  Insurance  companies  do  not  thrive  on  the  profits 
from  lapsed  policies,  as  many  ignorant  people  suppose,  but  on  the  steady 
and  long-continued  payment  of  premiums.  This  is  especially  true  of 


198  HISTORY  OF  THE   PRUDENTIAL. 

industrial  insurance,  where  it  takes  years  of  hard  work  to  build  up  a  pay- 
ing business. 

It  must  be  apparent  to  the  careful  student  of  Industrial 
insurance  history  that,  from  the  date  of  the  organization  of  The 
Prudential,  Industrial  insurance  had  not  only  made  constant  and 
material  progress  in  the  extension  of  its  operations,  but  that 
there  had  also  been  a  corresponding  increase  in  the  public 
appreciation  of  its  beneficence,  not  only  from  the  standpoint  of 
the  individual  policy-holder,  but  also  from  the  standpoint  of  the 
taxpayer  and  citizen  interested  in  the  diminution  of  public 
burdens.  It  is  rather  curious  to  observe  that,  in  the  face  of  these 
facts,  attempts  continued  to  be  made  to  interfere  with  the  legiti- 
mate functions  of  the  business.  While  some  of  the  most  impor- 
tant attempts  at  adverse  legislation  have  been  referred  to,  others 
were  made  in  different  parts  of  the  country,  which,  however,  as 
a  rule,  proved  equally  unsuccessful.  Wherever  the  business  was 
widely  known,  as  in  New  Jersej7,  New  York,  Pennsylvania  or 
Massachusetts,  it  was  naturally  only  a  question  of  publicity 
and  argument  to  make  clear  the  absurdity  and  iniquity  of  the 
unfounded  charges  against  the  business.  A  successful  attempt 
at  adverse  legislation  was  made  this  year  in  a  western  State, 
where  The  Prudential  had  only  recently  commenced  business 
operations,  and  where,  therefore,  an  extended  knowledge  of  the 
true  objects  and  results  of  Industrial  insurance  was  out  of  the 
question.  A  bill  was  introduced  in  the  Colorado  Legislature 
during  the  early  part  of  1893,  at  the  suggestion  of  the  Colorado 
Humane  Society,  to  prohibit  the  insurance  of  children  under 
ten  years  of  age. 

A  brief  hearing  was  given  before  the  Insurance  Committee 
of  the  Legislature,  and  in  response  to  a  request  for  information, 
with  special  reference  to  the  question  of  insurable  interest, 
the  following  facts  and  comments  were  placed  before  the  Com- 
mittee* : — 

It  may  be  asserted  that  a  parent  has  no  insurable  interest  in  the  life  of 
a  child.     We  contend  that  the  industrial  classes  have  the  moral  and  legal 


*  An  interesting  case  bearing  on  this  point  was  tried  in  Anderson,  Ind., 
a  few  years  ago,  in  which  the  value  of  a  child's  life,  its  earning  capacity, 
etc.,  were  brought  to  the  attention  of  the  jury  in  a  suit  for  damages  for 
fatal  injuries.  According  to  the  court  records  the  value  of  a  child's  life, 
at  age  four,  was  given  as  $149.50;  at  age  seven,  as  $600;  at  age  ten,  as 
$980  ;  at  age  fifteen,  as  $2,600 ;  and  finally  at  age  eighteen,  as  $4,200. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l892-'93.      199 

right  to  insure  their  children,  for  it  is  well  known  that  these  children  con- 
tribute to  the  support  of  their  families  at  very  early  ages,  so  early,  in  fact, 
that  in  New  York,  Connecticut,  and  other  States  laws  have  been  passed 
making  thirteen  the  minimum  age  at  which  children  should  be  employed 
in  manufacturing  establishments.  Meanwhile,  they  are  supported,  edu- 
cated, and  taught  a  trade  in  that  view. 

There  is  a  just  and  reasonable  expectation  of  advantage  or  benefit  from 
the  continuance  of  their  lives,  and  it  logically  follows  that  a  proper  justifi- 
cation inheres  in  the  parent  to  protect  that  benefit  while  his  child  is  insura- 
ble, and  before  sickness,  accident  or  other  causes  interpose. 

As  to  its  legality,  the  highest  tribunal  in  the  land,  the  Supreme  Court  of 
the  United  States,  has  gone  farther  than  is  here  indicated  by  announcing  that 
"  it  is  not  necessary  that  the  expectation  of  advantage  or  benefit  should  be 
always  capable  of  pecuniary  estimation,  for  a  parent  has  an  insurable  inter- 
est in  the  life  of  his  child,  a  child  in  the  life  of  his  parent,  a  husband  in  the 
life  of  his  wife,  and  the  wife  in  the  life  of  her  husband." 

In  Warnock  vs.  Davis,  U.  S.  S.  C.,  it  was  held  that  "  the  natural  affec- 
tion in  cases  of  this  kind  is  considered  as  more  powerful,  as  operating  more 
efficaciously  to  protect  the  life  of  the  insured  than  any  other  consideration." 

Again,  in  re  Phoenix  I^ife  Company  vs.  Bailey,  U.  S.  S.  C.,  it  was  held 
that  "  there  is  an  insurable  interest  if  it  appears  that  the  relation,  when  of 
consanguinity  or  of  affinity,  was  such  as  between  the  person  whose  life  was 
insured  and  the  benefit  named  in  the  policy  as  warrants  the  conclusion  that 
the  beneficiary  had  an  interest,  whether  pecuniary  or  arising  from  depend- 
ence or  natural  affection,  in  the  life  of  the  person  insured." 

Unfortunately  for  the  best  interests  of  the  people,  the  bill 
was  permitted  to  become  a  law.  Those  who  were  most  interested 
in  its  passage  had  no  opportunity  to  express  themselves  and  had 
no  means  whereby  they  could  make  public  their  views.  It  is  true 
that  the  Insurance  Department  of  the  State  expressed  itself  in 
favor  of  Industrial  insurance,  it  is  true  that  a  number  of  the 
more  intelligent  and  influential  members  of  the  Legislature  argued 
fully  the  people's  side  of  the  case,  but  the  fact  that  the  business 
was  new,  that  it  was  represented  in  only  two  or  three  counties  of 
the  State,  and  that  the  majority  of  the  members  were  absolutely 
unfamiliar  with  the  subject,  outweighed  the  argument  in  favor  of 
the  companies'  side  of  the  case.  How  far  the  members  of  the 
Legislature  were  misled  by  foolish  and  absolutely  untrue  state- 
ments on  the  part  of  those  who  were  not  in  favor  of  the  bill  is 
best  illustrated  by  an  article  in  the  Denver  Times,  from  which  I 
quote  the  following  passage  : — 

The  system  has  been  driven  out  of  almost  every  city  in  the  Union 
where  it  attempted  to  do  business,  and  has  drawn  upon  itself  the  sworn 


200  HISTORY  OF  THE   PRUDENTIAL. 

hostility  of  societies  for  the  prevention  of  cruelty  to  children,  since  it  has 
proved  to  be  the  cause  of  much  abuse  to  youths  of  tender  age.  Not  a  word 
can  be  said  in  its  favor,  and  much  can  be  charged  to  its  account  as  an  open 
avenue  to  fraud  and  crime.* 


The  system  had  not  only  not  been  driven  out  of  a  single  city 
in  the  United  States,  it  had  not  only  never  been  prohibited  in 
this  country  or  in  England,  but,  on  the  contrary,  it  had  been 
rapidly  extended  into  all  parts  of  -the  country,  into  Canada,  into 
Australia  and  even  into  the  Cape  Colony  of  South  Africa.  Wher- 
ever the  English  people  are  developing  industrial  communities, 
this  form  of  insurance,  either  in  the  form  of  Friendly  Societies 
or  of  Industrial  companies,  is  rapidly  increasing  in  popularity 
and  public  appreciation.  There  was  therefore  no  warrant  for 
the  statements  made  by  the  Denver  Times,  and  they  can  only 
be  explained  as  having  been  put  forward  for  partisan  reasons, 
Once  on  the  statute  book,  the  Colorado  law  naturally  became 
very  difficult  of  repeal,  and,  though  an  effort  in  this  direction 
was  made  during  the  session  of  1899,  to  which  reference  will 
be  made  further  on,  the  attempt  failed  because  of  the  work  of 
a  small  minority,  who  once  more  had  neither  public  opinion  nor 
a  single  iota  of  fact  to  support  their  antagonism  to  the  business. 

A  very  interesting  and  valuable  contribution  to  life-insur- 
ance literature  was  made  this  year  by  Dr.  Edward  H.  Hamill, 
the  Medical  Director  of  the  Company,  who,  at  the  Insurance 
Congress  of  the  Chicago  World's  Fair,  read  a  paper  entitled 
' '  Observations  Regarding  Risks  Declined  by  The  Prudential 
Insurance  Company  of  America,  1888-' 92."  By  an  entirely 
novel  and  original  method,  Dr.  Hamill  had  succeeded  in  keep- 
ing a  record  of  the  mortality  of  rejected  lives  in  the  Industrial 
department  of  the  Company's  business,  and  for  the  first  time  in 
life-insurance  history  actual  information  pertaining  to  this  class 


*  A  still  more  pertinent  illustration  of  the  perversion  of  facts  pertaining 
to  the  business  of  Industrial  insurance,  on  the  part  of  those  who  are  op- 
posed to  the  insurance  of  children,  is  to  be  found  in  the  Seventeenth  Annual 
Report  of  the  American  Humane  Association,  where  it  is  stated  that  The 
Prudential  Insurance  Company  had  children  insured  in  Colorado  for  sums 
as  high  as  $25,000.  As  a  matter  of  fact  the  Company  had  not  then  and  has 
not  now  a  single  policy  in  force,  on  a  child  under  ten  years  of  age,  for  one- 
hundredth  part  of  the  sum  mentioned. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l892-'93.       2OI 

of  risks  was  supplied  for  a  number  of  cases  large  enough  to 
warrant  the  conclusion  that  the  medical  examination  of  Indus- 
trial risks  was  sufficiently  accurate  and  satisfactory  to  protect 
the  best  interests  of  the  Company.  The  Prudential  Insurance 
Company  is  the  only  life  company  in  existence  collecting  infor- 
mation of  this  kind,  and  the  investigation  having  been  con- 
tinued, the  data  are  now  much  more  complete  and  of  greater 
determining  value. 


203  HISTORY  OF  THE  PRUDENTIAL. 


CHAPTER  XIII. 

THE  PRUDENTIAL   INSURANCE  COMPANY  OF  AMERICA, 
1894-1896. 

During  the  early  part  of  1894  The  Prudential  Insurance 
Company  made  an  important  change  in  its  Industrial  contracts, 
as  to  the  amount  of  benefit  payable  during  the  first  few  months 
of  policy  duration.  It  had  been  the  early  practice  of  the 
Company  to  grant  full  benefit  under  Industrial  policies  after  a 
period  of  three  months  of  policy  duration,  but  in  1877  this  prac- 
tice was  changed  and  the  benefit  was  made  one-quarter  of  the 
total  amount  of  insurance  when  the  policy  had  been  less  than 
six  months  in  force.  Subsequent  experience  proved  that  this 
provision  was  somewhat  too  liberal,  largely  because  of  the  fact 
that  a  considerable  amount  of  adverse  selection  was  possible 
under  the  rules  of  the  Company,  by  which  at  that  time  no 
medical  examination  or  inspection  was  required  on  policies  for 
less  than  $200.  Accordingly,  under  date  of  October  6,  1884,  a 
further  change  was  made  and  no  benefit  was  payable  during  the 
first  three  months  of  policy  duration  ;  in  other  words,  if  the 
policy-holder  died  during  the  first  three  months,  nothing  was  to 
be  paid  by  the  Company.  After  a  little  more  than  ten  years' 
experience,  it  was  once  more  decided  to  make  a  change  by  pro- 
viding a  more  liberal  feature,  and  this  year  (1894)  a  provision 
was  incorporated  in  the  Industrial  policy  by  which  only  one- 
third  of  the  total  amount  of  insurance  insured  for  under  the 
policy  was  payable  if  death  occurred  during  the  first  six  months 
of  policy  duration.  This  concession  of  an  immediate  benefit 
was  a  decided  step  in  advance,  since  hardship  often  resulted 
in  cases  where  death  occurred  during  the  early  period  of  policy 
duration. 

Due  largely,  no  doubt,  to  the  many  liberal  concessions  which 
had  been  made  by  the  Company  to  its  policy-holders,  the  year 
1894  proved  to  be  the  greatest  business  year  in  the  Company's 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,   189^96.      203 

history.  In  consequence  of  the  after  effects  of  the  panic  of  1893, 
an  increased  proportion  of  the  industrial  population  was  forced  to 
consider  more  seriously  the  question  of  a  small  life-insurance  pro- 
vision against  contingencies  likely  to  occur  at  any  time.  Private 
charity,  ever  ready  to  help,  assist  and  ameliorate  the  condition  of 
unfortunates  at  the  hour  of  death,  is  naturally  very  much  re- 
stricted during  years  of  panic  and  widespread  financial  or 
industrial  depression.  Hence,  during  1894  large  numbers  who 
would  otherwise  have  relied  upon  private  charity  or  public  sup- 
port realized  the  necessity  of  individual  provision  by  life-insur- 
ance methods  against  the  contingency  of  death,  the  expenses  of 
the  last  illness  and  the  immediate  support  of  dependents.  It 
had  well  been  said  by  the  Spectator,  under  date  of  March  22, 
1894,  that  "The  more  the  view  of  the  Industrial  companies 
being  charitable  organizations  is  advanced,  the  less  likely  are 
many  people  to  take  out  policies ;  for  they  would  not  accept 
charity  and  would  resent  the  appearance  of  the  agents  if  they 
had  the  wrong  idea  of  the  business. ' '  Neither  The  Prudential 
nor  any  other  Industrial  company  ever  attempted  to  create  the 
impression  among  the  industrial  population  that  Industrial  com- 
panies were  charitable  institutions.  Rather  to  the  contrary,  the 
agents  of  the  Company  had,  from  the  very  beginning,  preached 
thrift  and  independence  to  those  with  whom  they  came  in  contact 
in  the  discharge  of  their  regular  duties  as  canvassers  and  collectors. 
It  is  to  these  causes  that  I  would  attribute  the  immense  suc- 
cess of  the  Company  during  the  year  1 894,  when  under  ordinary 
conditions  a  decrease  in  business  should  have  been  expected  rather 
than  an  increase.  In  the  Industrial  department  during  the  year 
1894,  The  Prudential  issued  1,696,847  policies  for  an  aggregate 
sum  of  $205,128,000,  while  in  the  Ordinary  department  12,245 
new  policies  were  issued  for  an  aggregate  amount  of  $13,873,000 
of  life-insurance  protection.  The  results  attained  in  the  Indus- 
trial department  were  so  far  out  of  proportion  to  what  had  pre- 
viously been  achieved  that  it  is  doubtful  whether  the  record  of 
1894  will  be  exceeded  during  any  business  year  in  the  near 
future.  This  view  of  the  success  of  1894  *s  brought  out  in  a  dis- 
cussion on  the  outlook  for  the  year  in  the  Spectator  of  January 
ii,  1894,  from  which  I  quote  as  follows  : — 

The  statements  of  the  various  industrial  companies  will  be  published 
in  a  short  time  now,  and  then  it  will  be  seen  what  remarkable  progress,  in 


204  HISTORY  OF  THE   PRUDENTIAL. 

face  of  the  prevailing  depression,  has  been  made.  And  this  brings  us  to  a 
point  on  which  it  is  right  to  dwell  a  little.  The  history  of  industrial  insur- 
ance in  Great  Britain  shows  conclusively  that  in  time  of  stringency,  when 
the  outlook  of  the  people  who  had  to  depend  on  their  day's  earnings  to 
supply  the  day's  needs  was  unfavorable,  the  companies  made  large  increases. 
The  reason  for  this  is  obvious  to  the  thinker,  the  agents'  field  of  operation 
in  certain  lines  was  narrowed  because  they  could  not  get  money  where 
money  was  not,  and  so  they  canvassed  the  class  of  people  who  were  less 
affected  by  the  hard  times,  and  there  found  their  opportunity.  The  lessons 
of  the  times  had  been  impressed  on  the  minds  of  the  public ;  those  who  in 
the  season  of  prosperity  turned  a  deaf  ear  to  the  agent's  entreaties  saw 
instances  every  day  where  the  life  insurance  would  have  remedied  the 
trouble  brought  on  families  by  the  death  of  some  one  who  contributed  to 
the  funds  of  the  household,  and  when  the  agent  called  again  his  argument 
had  more  telling  effect.  This  is  the  first  time  since  the  inception  of  the 
business  here  that  those  interested  have  had  to  deal  with  financial  panics  of 
magnitude,  and  it  is  to  be  hoped  that  a  very  long  period  will  elapse  before 
a  like  experience  is  forced  upon  us.  The  field  men  have  discovered  their 
opportunities  for  doing  effective  work  now,  and  the  extraordinary  volumes 
of  business  turned  in  of  late  indicate  the  possibilities  of  the  present  year 
if  labors  be  rightly  directed  and  continued. 


Another  element  of  considerable  importance  in  making  for 
the  increasing  growth  and  prosperity  of  the  Company  was,  no 
doubt,  the  publication,  during  the  early  part  of  the  year,  of  the 
report  of  the  Commissioner  of  Banking  and  Insurance  of  the 
State  of  New  Jersey  on  the  financial  and  general  condition  of 
the  Company.  Without  going  into  the  details  of  this  report,  I 
confine  my  remarks  to  a  brief  reference  to  the  subject  as  pub- 
lished in  one  of  the  Newark  (N.  J.)  newspapers  during  1894: — 

It  will  be  seen  that  the  Commissioner  endorses  unqualifiedly  the 
methods  of  The  Prudential.  This  could  not  be  otherwise,  for  the  business 
has  always  been  conducted  in  such  a  way  as  to  merit  the  approval  of  all 
who  have  known  anything  about  it.  Not  only  so,  but  the  Company's  deal- 
ings with  its  policy-holders  have  been  more  than  fair.  It  has  been  liberal 
in  the  extreme,  as  was  shown  both  last  November,  when  it  made  such 
liberal  concessions  to  its  policy-holders  who  had  been  compelled  to  cease 
paying  their  premiums,  and  also  in  January  of  the  present  year,  when  it 
introduced  several  new  features,  every  one  of  which  was  of  great  advantage 
to  the  insured.  The  amount  of  good  which  this  Company  has  done  can  not 
be  indicated  in  any  report  and,  in  fact,  it  is  almost  impossible  to  ascertain 
what  it  has  accomplished  unless  one  should  be  able  to  interview  every  one 
to  whom  a  claim  has  been  paid.  In  this  way  a  mass  of  testimony  to  the 
advantages  obtained  by  Prudential  policy-holders  would  be  secured  which 
would  fill  volumes. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l894~'96.      205 

Still  another  powerful  factor  influencing  public  opinion  is 
to  be  found  in  the  publication  this  year  of  a  special  report  of  the 
Deputy  Superintendent  of  Insurance  of  the  State  of  New  York, 
on  his  examination  of  another  great  Industrial  company,  the 
Metropolitan  lyife  Insurance  Company,  of  New  York.  Mr. 
Michael  Shannon,  as  Deputy  Superintendent  of  Insurance,  made 
special  reference  to  three  important  aspects  of  the  practice  of 
Industrial  companies,  and  from  the  report  I  quote,  first,  his  views 
as  to  the  expense-rate  in  Industrial  insurance  : — 

It  may  not  be  inappropriate  for  me  to  allude,  as  a  plain  matter  of  jus- 
tice to  this  business,  to  the  fact  that  industrial  insurance  being,  as  before 
said,  distinctive  and  essentially  unlike  in  practice  that  of  the  other  life- 
insurance  companies,  ratios  and  comparisons  based  upon  the  records  of  the 
latter  may  be  deceptive  and  misleading.  It  is  obvious,  for  example,  that  in 
the  matter  of  expense  no  just  comparison  is  possible.  In  the  ordinary 
companies  the  premiums  are  due  once,  twice,  or  four  times  a  year,  and  a 
large  proportion  of  them,  in  answer  to  notices,  is  sent  by  the  assured  direct 
to  the  company,  or  to  its  local  office  or  agent.  Under  the  industrial  plan 
the  premiums  are  invariably  called  for,  by  the  agent,  at  the  expense  of  the 
company,  fifty-two  times  a  year,  and  even  more  frequently,  When  death 
occurs,  the  proofs  are  prepared  by  the  company's  representative  at  the 
company's  cost,  and  the  proceeds  of  policies  are  taken  in  the  same  way  to 
the  beneficiary.  In  these,  as  in  all  its  features,  the  difference  is  as  obvious 
as  between  any  wholesale  and  retail  business.  The  multiplication  of  ma- 
chinery here  means  the  multiplication  of  expense,  and  that  expense  falls 
to  the  company. 

To  these  remarks  on  the  vexed  and  complex  question  of  the 
management  expenses  of  the  business,  I  add  the  following  re- 
marks from  Mr.  Shannon's  report  in  regard  to  lapses  : — 

Criticism  is  sometimes  thoughtlessly  or  ignorantly  made  in  the  matter 
of  lapses.  Why  do  so  many  withdraw  ?  Investigation  shows  that  lapses  in 
this  form  of  insurance  are  of  quite  a  different  nature  from  those  in  the  or- 
dinary lines.  When  a  policy-holder  withdraws  from  a  [Ordinary]  company, 
usually  he  stays  out  permanently.  He  takes  his  paid-up  policy,  or  his  sur- 
render value,  or  forfeits  his  insurance  altogether,  as  the  case  may  be,  and 
that  ends  the  relation.  But  a  vast  proportion  of  those  who  lapse  in  the  in- 
dustrial come  back.  Numberless  causes  conspire  to  force  them  out,  such  as 
wide-spread  commercial  depression,  the  shutting  down  of  mills  and  factories, 
the  failure  of  employers,  strikes  and  other  labor  disturbances,  and  enforced 
idleness  from  various  causes.  When  they  resume  work  they  revive  their 
policies,  which  they  can  do  within  a  year,  or  apply  for  new  ones.  Thus 
they  come  and  go  ;  thus  the  process  repeats  itself.  Nor  will  the  fact  be 
overlooked  that  the  opportunity  to  lapse  occurs  once,  twice,  and  at  the 


206  HISTORY  OF  THE  PRUDENTIAL. 

most  four  times  a  year,  in  the  ordinary  companies,  while  the  occasion  pre- 
sents itself  fifty -two  times  a  year  in  the  industrial. 

To  this  straightforward  statement  of  another  complex  aspect 
of  the  business  of  Industrial  insurance,  Mr.  Shannon  added  the 
weight  of  his  official  opinion  in  reference  to  the  expediency  of 
insuring  the  lives  of  children,  which  I  quote  in  full  as  follows  : — 

Still  another  reference  to  which  I  deem  it  almost  unnecessary  to  allude, 
and  which  I  do  only  to  give  this  report  the  utmost  comprehensiveness.  I 
allude  to  the  imputation  (occasionally  put  forth  by  those  who  can  not  have 
given  the  records  of  the  business  any  investigation)  that  the  embracing  of 
small  infantile  insurances  in  the  industrial  plan  is  subversive  of  public 
policy — in  brief,  that  it  leans  toward  possible  infanticide.  This  is  a  mon- 
strous charge  that  no  person  should  make  without  proof.  The  facts  are 
that  the  proportion  of  infantile  claims  paid  during  the  last  year  was  but 
4.3  per  cent,  of  the  total  amount.  This  matter  has  been  before  the  legis- 
latures of  various  states,  and  before  numerous  humane  societies.  Com- 
mittees have  been  appointed  to  investigate.  Searching  and  exhaustive  in- 
quiries have  been  made,  and  in  no  single  instance  has  the  imputation  been 
sustained.  Carefully  collated  statistics  prove  that  the  mortality  among  the 
insured  minors  is  less  than  the  mortality  of  the  general  infantile  population. 
Out  of  more  than  twenty  millions  of  industrial  policies  issued  in  this  coun- 
try, but  one  case  coming  under  this  indictment  has  occurred,  and  that  was 
the  instance  of  a  mother  who  did  away  with  all  her  family,  including  the 
husband  upon  whose  life  she  depended  for  support !  That  was  manifest 
insanity. 

Across  the  water  professional  agitators  have,  from  time  to  time,  influ- 
enced parliamentary  investigations,  but  in  every  instance  the  conclusion  has 
been  that  no  legislation  or  other  interference  was  in  any  wise  necessary  or 
expedient.  The  State  of  New  York  has  put  its  seal  upon  this  matter  by 
specifically  providing  for  the  business  of  infantile  insurance  in  its  insurance 
code.  Like  action  has  been  taken  in  the  Dominion  of  Canada. 


Mr.  Shannon's  remarks  with  reference  to  the  expense-rate, 
the  lapse-rate  and  the  insurance  of  children  are  fully  applicable 
to  The  Prudential  Insurance  Company,  as  well  as  to  all  other  com- 
panies transacting  an  Industrial  business.  Where  such  unanimity 
of  unqualified  official  opinion  prevails,  it  would  seem  little  short  of 
criminal  indifference  on  the  part  of  those  unfamiliar  with  the 
practice  and  results  of  Industrial  insurance  to  continue  in  attempts 
to  interfere  with  the  business  in  one  respect  or  another. 

The  efforts  in  opposition  to  Industrial  insurance  may  be 
divided  into  three  distinct  groups  :  first,  those  relating  to  the 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l894~'96.      207 

discrimination  made  against  negroes,  in  granting  to  them  only 
two-thirds  of  the  benefits  granted  to  white  policy-holders  ;  second, 
those  relating  to  the  practice  of  the  companies  in  accepting  small 
risks  on  the  lives  of  children  for  burial  purposes  and  the  cost  of 
the  last  illness ;  third,  those  relating  to  miscellaneous  matters 
dealing  with  the  practice  of  the  companies  as  regards  lapses,  sur- 
render values,  immediate  benefits,  etc. 

The  opposition  to  the  companies'  practice  as  regards  discrimi- 
nation against  negroes  originated  partly  with  the  sentimental  ele- 
ment of  the  population,  acting  on  the  unwarranted  assumption 
that  the  companies  made  this  distinction  on  account  of  color 
prejudice,  when,  as  a  matter  of  fact,  the  distinction  was  based 
solely  on  the  observed  difference  in  mortality  between  the  two 
races,  pointing  to  an  inordinate  disease  prevalence  and  an  exces- 
sive death-rate  among  the  colored  population. 

As  regards  the  practice  of  insuring  the  lives  of  children,  pro- 
hibitive measures  had,  almost  without  exception,  been  introduced 
at  the  instance  of  individuals  connected  with  societies  for  the  pre- 
vention of  cruelty  to  children  or  other  so-called  humanitarian 
bodies.  There  had  never,  in  a  single  instance,  been  proof  of 
abuses  actually  connected  with  this  branch  of  the  business ;  no 
cases  had  been  produced  tending  to  show  that  children  had  actu- 
ally been  murdered  for  the  insurance  payable  at  their  death,  or  that 
they  had,  in  any  manner  or  way,  been  ill-treated  with  this  end  in 
view.  Arguments  in  favor  of  prohibiting  the  business  had  almost 
invariably  been  based  on  English  references  to  the  subject,  where, 
again,  cases  which  were  brought  forward  as  facts  were,  as  a  rule, 
fabrications  or  imaginary  instances  of  neglect.  .  The  companies,  on 
their  side  of  the  argument,  had  presented  facts  tending  to  prove 
that  insured  children  lived  longer  than  uninsured  children,  and 
they  further  could  point  to  their  vast  experience  as  proof  that,  out 
of  the  millions  of  years  of  child  life  which  had  been  observed  by 
Industrial  companies,  not  a  single  instance  of  foul  play  or  murder 
for  insurance  money  had  ever  come  to  their  notice ;  and  they 
could  add  the  statement,  which  holds  good  to-day  as  it  did  then, 
that  never  in  the  history  of  an  Industrial  company  had  a  case 
been  proved  where  a  parent  had  been  convicted  by  a  jury  for 
having  deliberately  murdered  a  child  for  the  sake  of  the  few 
dollars  receivable  at  its  death  for  burial  purposes.  Nevertheless, 
continued  efforts  were  made  in  1894  to  prohibit  the  insurance 


208  HISTORY  OF  THE  PRUDENTIAL. 

of  children  in  the  States  of  Connecticut  and  Tennessee,  as  well 
as  in  other  States,  but  after  a  fair  presentation  of  the  facts  no 
laws  restricting  the  companies  from  transacting  this  form  of  in- 
surance were  passed  during  the  year,  nor  have  any  such  laws 
been  passed  since  that  time. 

In  Colorado,  where  such  a  law  had  been  passed  in  1893,  The 
Prudential  had  at  once  discontinued  writing  insurance  on  the 
lives  of  children  under  ten,  although  the  decision  had  been  ren- 
dered by  a  district  court  in  the  city  of  Denver  that  the  law  itself 
was  unconstitutional.  If  the  question  is  asked  why  The  Pru- 
dential Insurance  Company  did  not  carry  this  point  to  a  higher 
court,  or  possibly  to  the  United  States  Supreme  Court,  the 
answer  is  that  the  Company  prefers  to  abide  by  the  will  of  the 
people,  and  if  the  majority  of  the  Legislature  decide  that  this 
form  of  insurance  shall  not  be  transacted,  the  Company  is  willing 
to  abide  by  the  decision.  Evidence  is  not  wanting  tending  to 
show  that  after  the  law  had  been  passed  many  of  the  more  intel- 
ligent members  of  the  Legislature  recognized  the  inexpediency  of 
the  measure,  and  it  may  not  be  out  of  place  in  this  connection  to 
quote  a  remark  from  the  annual  report  of  the  Insurance  Super- 
intendent of  Colorado  for  1894,  in  which  the  view  that  the  trans- 
action of  this  form  of  insurance  is  not  detrimental  to  public  policy 
is  fully  accepted  by  one  qualified  as  Insurance  Superintendent  to 
express  an  opinion  on  the  subject : — 

This  kind  of  insurance  is  making  vast  strides  and  has  almost  reached 
the  billion-dollar  mark  in  amount  of  risks  written.  It  is  particularly  the 
poor  man's  field  of  patronage,  and  vindicates  the  superior  intelligence  and 
discernment  of  the  working  class.  The  companies  handling  Industrial  in- 
surance rank  high,  and  a  breath  of  suspicion  or  distrust  has  never  touched 
their  financial  fabric.  As  to  the  claim  that  Industrial  insurance  encourages 
child-murder  and  prompts  the  murderer's  hand  to  despoil  tender  youth  of 
life,  we  insist  proof  has  never  been  brought  forward  sufficient  to  show  that 
crime  committed  to  secure  insurance  on  a  child's  life  has  been  nearly  so 
frequent  as  crime  committed  to  secure  insurance  placed  on  adult  lives  in 
old-line  companies. 

As  regards  so-called  discrimination  against  negroes,  further 
efforts  were  made  this  year  to  pass  laws  to  prohibit  companies 
from  making  such  discrimination.  An  effort  had  been  made  in 
New  Jersey  during  1893,  and  a  bill  to  this  effect  had  been  passed, 
which,  however,  had  been  vetoed  by  the  Governor.  In  opposing 


THE  PRUDENTIAL  INS.  CO.  OF  AMEKICA,  1 894-^96.       209 

a  measure  to  this  effect  introduced  in  the  Legislature  during  the 
early  part  of  1894,  The  Prudential  Insurance  Company  presented 
figures  and  facts  tending  to  show  that  the  Company  would  not  be 
warranted  in  granting  the  same  benefits  to  colored  policy-holders 
as  to  whites.  The  Actuary  of  the  Company  furnished  data  from 
the  Company's  own  experience,  making  clear  the  excessive  mor- 
tality prevailing  among  colored  risks,  and  it  was  shown  that 
instead  of  discriminating  against  the  negroes,  the  Company  had, 
in  fact,  been  more  liberal  towards  this  race  than  towards  the 
white  population.  The  Company,  however,  could  not  feel  war- 
ranted in  granting  similar  benefits  to  both  races  without  doing  an 
injustice  to  its  white  policy-holders,  who  would  be  compelled  to 
pay  for  an  unwarranted  liberality  towards  negro  applicants.  The 
bill,  unfortunately,  passed  both  houses  of  the  Legislature,  and 
was  approved  by  the  Governor.  The  views  of  the  Company  on 
this  subject  were  fully  set  forth  in  a  letter  dated  September  5, 
1894,  to  the  editor  of  the  Indicator,  over  the  signature  of  the 
Vice- President  of  The  Prudential : — 

The  Prudential  began  to  issue  policies  November  10,  1875.  From  that 
date  to  April  I,  1881,  the  applications  of  colored  persons  were  considered 
by  the  Company  on  the  same  terms  and  conditions  as  the  applications  of 
white  persons.  In  the  early  part  of  1881  it  was  discovered  that  the  number 
of  claims  paid  by  the  Company  on  the  lives  of  colored  persons,  as  com- 
pared with  the  total  number  of  claims,  exceeded  the  proportion  which  the 
colored  business  of  the  Company  bore  to  its  whole  business.  This  led  to 
an  investigation  into  the  Company's  mortality  experience  amongst  the  two 
classes  of  risks  (white  and  colored),  and,  although  at  this  early  period  of 
the  Company's  history  the  number  of  colored  persons  on  the  books  of  the 
Company  did  not  compose  a  body  large  enough  to  furnish  data  for  an  ex- 
tended research,  positive  evidence  was  found,  from  the  data  at  hand,  that 
the  rate  of  mortality  amongst  colored  persons  insured  in  The  Prudential 
was  considerably  above  the  rate  which  obtained  amongst  white  persons  in- 
sured in  the  Company.  While  the  office  investigation  was  being  carried  on, 
health  reports  were  obtained  from  nearly  all  of  the  large  cities  east  of  the 
Mississippi.  In  a  number  of  these  reports  it  was  found  that  the  mortality 
was  recorded  by  white  and  colored  lives.  A  tabulation  of  the  contents  of 
the  reports  which  gave  the  mortality  by  races  confirmed  the  conclusion 
arrived  at  from  the  office  experience. 

As  the  result  of  its  investigations  the  Company  decided  to  use  a  special 
table  of  benefits  (amounts  insured)  for  colored  persons.  In  the  case  of  adults 
(ages  12  to  70)  this  table  gave  one-third  less  benefit  to  a  colored  person 
than  was  granted  for  the  same  premiums  to  a  white  person  of  equal  age.  In 
the  case  of  infants  (ages  I  to  12)  the  tables  gave  to  colored  infants  forty  per 
cent,  less  benefit  than  the  amounts  granted  to  white  infants. 


210 


HISTORY  OF  THE   PRUDENTIAL. 


i- 


Since  1881  the  mortality  of  the  Company  has  been  carefully  tabulated 
each  year  by  white  and  colored  risks.  Each  tabulation  has  confirmed  the 
first  investigation  of  the  Company,  and  nothing  has  been  discovered  in  our 
experience  which  has  led  us  to  modify  the  tables  of  rates  determined  upon 
at  that  time. 

The  following  table  shows  the  amounts  which  The  Prudential  has  paid 
in  claims  for  each  $1,000  of  insurance  exposed  to  risk  of  death  on  white  and 
colored  lives  for  the  ten  years  beginning  with  1884  and  ending  with  1893  : — 

LOSS  IN  CLAIMS  PER  $1,000  OF  INSURANCE  EXPOSED  TO  RISK. 

AGES,  1-70. 


YEAR. 

WHITE  PERSONS. 

COLORED  PERSONS. 

1884,   

$ir  27 

$18  T\ 

1885   .  . 

nry   Atj 

!886   

17  QO 

**  4/ 

1887 

i  /  yu 

1  6  ^o 

21  AQ 

1888   

16  60 

21  68 

1880 

TC   A  C 

21  A1 

1800 

17   I  I 

21  4Q 

1801, 

l6  71 

21  Ad 

1802. 

17  QI 

21  32 

1803, 

17  3d. 

21  89 

Average  10  years,  ... 

$16  06 

$21  63 

But  the  high  mortality  amongst  colored  persons  is  not  the  only  objec- 
tionable feature  to  the  writing  of  life-insurance  policies  on  their  lives.  We 
find,  from  our  office  statistics,  that  policies  on  colored  lives  lapse  in  far 
greater  ratio  than  policies  on  white  persons,  and  that  the  highest  percentage 
of  lapse  comes  within  a  very  few  weeks  of  the  issuance  of  the  policy.  In  fact, 
the  greater  portion  of  the  colored  business  issued  by  The  Prudential  is  not 
continued  on  the  books  of  the  Company  long  enough  to  recoup  the  Com- 
pany for  the  initial  expenses  of  getting  the  business.  In  many  cases  those 
who  continue  their  policies  do  not  seem  to  value  them  or  lay  much  stress 
upon  their  possession.  Numerous  instances  are  found  upon  our  books 
where  policies  on  colored  people  have  been  lapsed  and  revived  a  dozen  or 
more  times. 

As  pertinent  to  this  question,  we  might  state  here  that  within  the  past 
two  or  three  years  several  States  have  passed  laws  compelling  life-insurance 
companies  to  consider  applications  of  colored  persons  on  the  same  terms 
and  conditions  as  the  applications  of  white  persons.  Such  legislation  has 
been  enacted  notwithstanding  that  all  the  evidence  pointed  to  the  fact  that 
the  passage  of  these  so-called  anti-discrimination  laws  would  constitute  a 
serious  menace  to  the  life-insurauce  companies  in  case  there  should  be  a 
widespread  demand  among  negroes  for  life-insurance  policies.  In  the  States 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l894~'96.      211 

where  such  legislation  has  been  enacted  The  Prudential  will  receive  the 
application  of  a  colored  person  under  certain  rules.  Its  agents,  however, 
are  forbidden  to  canvass  for  such  applications,  and  no  commissions  whatever 
are  paid  on  premiums  collected  from  colored  persons.  In  those  States 
which  allow  discrimination  between  the  two  races,  and  in  which  The  Pru- 
dential may  consider  applications  from  colored  persons  under  its  rules,  we 
have  recently  issued  instructions  that  our  agents  shall  write  only  a  small 
percentage  of  their  whole  business  amongst  colored  persons. 

This  letter  is  not  intended  as  an  expression  of  opinion,  personal  or 
otherwise,  with  regard  to  the  moral  or  the  social  conditions  of  the  colored 
race.  It  is  intended  as  a  statement  of  the  facts  and  conclusions  which 
cause  The  Prudential  to  take  the  position  which  it  does  with  respect  to  the 
colored  race  as  insurance  risks.  Neither  are  any  of  the  objections  herein 
stated,  except  as  to  mortality,  directed  against  that  class  of  colored  persons 
who  are  possessed  of  intelligence  and  thrift,  and  whose  social  and  moral 
lives  are  such  that  they  are  a  credit  to  the  community  in  which  they  reside. 
It  may  be  that  if  this  class  could  be  separated  from  the  colored  race  as  a 
whole  the  mortality  amongst  them  might  be  considerably  less  than  among 
the  entire  body  ;  but  we  are  quite  sure  that  the  mortality,  even  amongst  the 
best  of  colored  lives,  would  not  compare  favorably  with  the  mortality 
amongst  the  whites. 

LESUE  D.  WARD, 

Vice- President  The  Prudential  Insurance  Company  of  America. 


In  consequence  of  the  New  Jersey  law,  passed  in  1894, 
Prudential  Insurance  Company  to-day  makes  no  effort  to  obtain 
colored  risks  at  rates  which  it  feels  would  be  prejudicial  to  the 
business  as  a  whole.  In  this  respect,  however,  the  Company 
differs  from  some  other  Industrial  companies,  which  still  continue 
to  solicit  colored  risks  in  more  or  less  large  proportions.  With 
The  Prudential  this  question  has  never  been  a  matter  of  opinion, 
but  a  matter  of  thorough  study,  investigation  and  observation,  and 
until  facts  to  the  contrary  are  forthcoming,  tending  to  prove  that 
the  mortality  of  the  colored  race  more  nearly  approximates  the 
mortality  prevailing  among  the  white  population,  the  Company 
is  not  likely  to  change  its  practice  in  dealing  with  this  class  of 
risks. 

An  effort  was  also  made  in  1894,  in  the  State  of  New 
Jersey,  to  pass  a  law  compelling  Industrial  companies  to  grant 
paid-up  policies  in  event  of  lapse  after  three  years.  It  has  been 
pointed  out  that  The  Prudential  had  already  voluntarily  conceded 
to  its  policy-holders  a  five-year  paid-up  policy,  and  the  Company 
opposed  the  measure  on  the  ground  that  Industrial  policies  did 


212  HISTORY  OF  THE   PRUDENTIAL. 

not  warrant  surrender  privileges  during  the  first  few  years  of 
policy  duration,  in  consequence  of  the  large  initial  expense  in 
transacting  this  form  of  insurance.  The  effort  did  not  prove  suc- 
cessful in  1894,  but  another  attempt  was  made  during  1895,  when 
a  bill  to  this  effect  became  a  law. 

As  has  previously  been  pointed  out,  the  Company,  during 
1894,  had  made  enormous  progress  in  the  extension  of  its  busi- 
ness operations,  having  gained  an  exceedingly  large  proportion  of 
new  policy-holders,  increasing  the  total  number  of  Industrial 
policy-holders  by  the  3ist  of  December,  1894,  to  2,256,014,  for 
an  aggregate  amount  of  insurance  protection  of  $259,840,000. 
The  net  increase  in  policy-holders  had  been  314,481,  equal  to 
1 6. 2  percent,  over  the  preceding  year.  Here  again  it  may  be 
proper  to  refer  to  a  point  so  easily  misunderstood  by  those  who 
have  not  made  an  extensive  study  of  insurance  methods.  It  will 
be  observed,  on  comparing  the  net  increase  in  business  in  force 
with  the  vast  amount  of  new  business  written  during  the  year, 
that,  while  over  a  million  and  a  half  of  new  policies  had  been 
written,  only  a  net  increase  of  a  little  over  300,000  policies  had 
been  made.  This  enormous  difference  is  to  be  explained  on  the 
ground  that  in  Industrial  insurance  every  policy  issued  is  counted 
for  actuarial  purposes,  irrespective  of  the  fact  whether  any 
money  has  been  paid  on  the  same  or  not.  While  the  agent  is 
required  to  collect  the  first  premium,  very  often  this  is  not  done 
and  the  majority  of  policies  which  lapse  for  non-payment  are 
new  policies  of  less  than  six  weeks'  duration. 

A  large  number  of  lapsed  policies  in  Industrial  insurance 
are  merely  a  bookkeeper's  statement  made  for  actuarial  pur- 
poses, and  do  not  represent  a  material  pecuniary  loss  to  the 
public,  but  rather  a  considerable  loss  to  the  companies. 
Hence,  the  very  large  amount  of  new  business  written  and 
lapsed  during  1894  may  at  least  be  said  to  point  to  indirect 
benefits  in  the  nature  of  insurance  education,  in  that  over  a 
million  people  were  made  familiar  with  Industrial  policies  and 
Industrial  insurance  literature,  even  though  they  did  not  at  the 
time  consider  it  to  their  interest  to  keep  the  policies  in  force. 
They  lost  practically  nothing  in  the  few  premiums  which,  in 
most  cases,  had  been  paid,  and  at  least  they  had  had  an  insurance 
protection  extending  over  a  period  of  the  six  weeks  or  more 
that  the  policy  had  actually  been  in  force,  since  four  weeks' 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l894~'96.      213 

grace  is  allowed  on  every  Industrial  policy,  and  every  possible 
opportunity  is  given  for  revival  or  reinstatement.  The  companies 
can  not  be  charged  with  a  lack  of  liberality  in  dealing  with  this 
class  of  policy-holders,  or  a  lack  of  good  judgment  in  attempt- 
ing to  extend  as  rapidly  as  possible  its  business  operations  in 
all  parts  of  the  country  where  offices  have  been  opened. 

In  few  instances  has  the  good  work  of  the  Company  been 
more  emphatically  recognized  than  in  the  New  York  Independent 
of  December  13,  1894,  where  I  find  it  stated  that  "  The 
Prudential  Insurance  Company  of  America  has,  to  our  way  of 
thinking,  done  one  of  the  most  noble  works  of  any  corporation  in 
the  land.  It  is  excellently  well  managed,  and  is  rapidly  increas- 
ing its  business." 

The  year  1895  found  the  Company  in  an  excellent  financial 
position,  with  over  $13,000,000  of  accumulated  assets,  with  a 
surplus  of  almost  $3,000,000,  and  a  rapidly  extending  Ordinary 
business,  now  reaching  proportions  exceeding  the  business 
transactions  of  a  large  number  of  companies  established  for 
more  than  thirty  or  forty  years. 

The  year  proved,  in  many  respects,  one  of  the  most 
remarkable  in  life-insurance  history.  A  large  number  of  bills 
adverse  to  the  interests  of  the  insurance  business  were  intro- 
duced into  the  Legislatures  of  many  States.  The  Industrial 
business  was  seriously  attacked,  partly  on  account  of  policy 
conditions  relating  to  surrender  values,*  largely  on  account  of 
the  practice  of  Industrial  companies  in  accepting  small  risks 
on  the  lives  of  children.  As  has  previously  been  stated,  an  effort 
had  been  made  in  the  State  of  New  Jersey  in  1894  to  compel 
Industrial  companies  to  grant  a  surrender  value  after  three  years 
of  policy  duration.  The  effort  had  failed,  but  a  new  attempt 


*  Although  Paid-up  policies  had  been  granted  by  The  Prudential  and 
other  Industrial  companies  since  January  I,  1892,  even  as  late  as  1896  a 
report  published  by  the  New  York  University  Settlement  Society  contained 
a  bitter  and  unwarranted  attack  on  the  business  of  the  Industrial  companies, 
concluding  with  the  statement  that  "there  are  no  Paid-ups  in  Industrial 
insurance."  Even  the  most  superficial  investigation  or  inquiry  at  the 
offices  of  the  companies  would  have  made  it  clear  that  every  policy  issued 
since  1892,  and  by  retroaction  all  policies  issued  previous  to  that  year, 
contained  a  clause  granting  a  surrender  value  in  the  nature  of  Paid-up 
insurance. 


214  HISTORY  OF   THE   PRUDENTIAL. 

made  during  the  early  part  of  1895  proved  successful,  and  a  bill  to 
this  effect  became  a  law.  Referring  to  this  species  of  legislation, 
the  Insurance  Monitor,  under  date  of  April  ist,  well  said  that — 

The  object  of  this  law  was  to  compel  the  payment  of  surrender  values 
by  industrial  companies  at  the  end  of  three  years.  It  originated  in  1893 — 
as  so  many  insurance  measures  have  originated — with  a  member  who  had 
once  been  employed  as  an  industrial  agent,  and  who  had  had  a  personal 
grievance  with  his  company.  This  man  did  not  claim  to  have  any  such 
knowledge  of  the  business  as  would  enable  him  to  decide  what  surrender 
values  could  safely  be  paid.  But  the  surrender  value  of  New  York,  which 
expressly  relieved  industrial  companies  from  its  operations,  was  copied  in 
nearly  all  its  essential  features,  and  made  applicable  to  this  class. 

The  legislative  committees  were  shown,  not  merely  by  figures  furnished 
by  the  company,  but  by  figures  in  the  archives  of  the  State,  that  there  was 
absolutely  no  such  fund  in  the  possession  of  the  companies  as  was  assumed 
in  the  bill  from  which  the  surrenders  could  be  paid.  They  were  shown  that 
any  payments  made  must  be  taken  from  funds  which,  if  they  belonged  to 
the  policy-holders  at  all,  were  the  property  of  those  who  had  been  longer 
insured.  They  were  shown  that  all  the  objects  aimed  at  in  the  bill  had 
already  been  accomplished  by  competition,  and  that  it  was  an  attack  on  the 
interests  of  those  longer  insured.  They  were  shown  that  the  bill  was  directed 
against  the  institutions  of  their  own  State  in  the  interest  of  outsiders. 
These  committees  and  legislators  were  appealed  to  by  some  of  the  most 
influential  men  of  New  Jersey  not  to  do  this  unjust  thing.  It  was  openly 
confessed  by  members  of  their  own  body  that  not  a  single  sufficient  reason 
had  been  shown  for  its  passage. 

In  compliance  with  the  law,  The  Prudential,  under  date  of 
June  24th,  issued  the  following  circular  letter  for  the  information 
of  its  agency  force  and  the  general  public  : — 

PAID-UP  POLICIES. 

All  policies  issued  after  July  ist  will  be  subject  to  Paid-up  Policies  after 
three  years'  premiums  have  been  paid,  provided  written  demand  is  made  for 
the  Paid-up  Policy  within  three  months  from  the  date  of  lapse. 

In  the  case  of  Life  Policies,  Paid-ups  will  be  issued  either  for  the  Whole 
of  Life  or  for  the  Expectation  of  Life,  as  the  person  insured  may  elect. 
Tables  of  Paid-ups  per  $100  of  original  insurance  under  the  latter  plan  will 
be  printed  in  the  policy,  as  per  present  practice.  In  the  case  of  Endowments, 
Paid-up  Policies  will  be  for  proportioned  parts,  as  at  present ;  but  the  period 
after  which  a  Paid-up  may  be  obtained  will  be  reduced  from  five  to  three 
years. 

This  concession  will  apply  only  to  policies  issued  on  and  after  July  i,  1895. 

In  the  same  circular  letter  it  was  stated  that  all  policies  issued 
after  July  ist  would  be  incontestable  after  two  years,  and  a  further 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l894~'96.      215 

concession  was  made  with  respect  to  immediate  benefits  under 
infantile  policies,  which  I  quote  as  follows  : — 

IMMEDIATE  BENEFITS. 

It  has  been  decided,  with  respect  to  the  "Immediate  Benefit"  conces- 
sion, to  modify  the  Infantile  contract  to  this  extent :  That  the  sum  payable 
in  case  of  death  within  three  months  from  date  of  policy  will  be  shown  by 
the  following  table.  After  three  months  the  present  benefits  will  be  payable. 
The  benefits  in  the  Colored  Infantile  Policy  will  be  reduced  in  proportion. 
The  benefits  in  the  Adult  Policy  will  remain  the  same  : — 

TABLE   OF  BENEFITS— FIRST  THREE  MONTHS  OF  INSURANCE. 
FOR  A  WEEKLY  PREMIUM  OF  FIVE  CENTS. 


AGES. 


2 

3 

4 

5 

6 

7 

8 

9 

10 

II 

12 

Infantile—  White, 

$8 

$10 

$11 

$13 

$15 

5i7 

$20 

$22 

$25 

$30 

$35 

Mention  has  been  made  of  an  earlier  concession  to  the  policy- 
holders  of  The  Prudential  on  policies  designated  as  ' '  Special 
Adult ' '  business.  Dividend  additions  had  been  provided  for  poli- 
cies of  this  class  issued  during  the  years  1890-' 93,  of  which  the 
first  fell  due  during  the  early  part  of  1895.  Accordingly,  under 
date  of  January  2nd,  the  Company  issued  the  following  circular 
letter  relative  to  this  class  of  policies  : — 

DIVIDEND  ADDITIONS  ON  SPECIAL  ADULT  POLICIES. 

At  the  end  of  each  fifth  year  from  the  date  of  this  policy,  if  in  force,  the 
sum  hereby  insured  will  be  increased  by  an  amount  to  be  determined  by 
the  Company,  and  based  on  the  surplus  earnings  from  similar  Special  In- 
dustrial policies.  Each  Addition  so  made  shall  be  considered  as  part  of  this 
policy,  and  subject  to  the  same  conditions  and  agreements. 

In  compliance  with  this  agreement,  we  have  this  day  decided  to  add 
Three  (3)  per  cent,  to  the  original  amount  insured  under  all  Special  Indus- 
trial policies  issued  in  the  year  1890  which  contain  the  above  condition,  the 
increase  to  apply  on  the  fifth  anniversary  date  of  the  policy,  and  not  before. 
For  example,  a  policy  of  $1,000  will  be  increased  to  $1,030,  and  a  policy  of 
$500  to  $5 15. 

Although  the  evidence  furnished  by  the  documents  from 
which  I  have  quoted  illustrates  The  Prudential's  spirit  of  lib- 
erality in  dealing  with  its  policy-holders  and  its  sense  of  caution 
in  the  management  of  the  business,  with  special  reference  to 


2l6  HISTORY  OF  THE   PRUDENTIAL. 

possible  undesirable  conditions,  it  is  difficult  to  understand  the 
large  number  of  attempts  at  adverse  legislation  made  during  a 
year  when  the  business  of  Industrial  insurance  had  reached  a 
sufficient  degree  of  magnitude  to  be  fully  understood  by  legisla- 
tors, as  well  as  by  professional  agitators  and  others  opposed  to 
the  business  of  Industrial  insurance.  It  is  something  very  con- 
siderably to  the  credit  of  the  intelligence  and  honesty  of  the 
average  legislator  that,  although  numerous  attempts  were  made 
to  interfere  with  the  Company's  practice  in  accepting  risks  on 
the  lives  of  children,  no  laws  of  this  nature  were  actually  enacted. 
Such  attempts  were  made  in  Missouri,  Idaho,  Illinois,  Michigan, 
Georgia,  Tennessee  and  Massachusetts.  Of  these  numerous 
attempts  it  is  only  the  last  two  which  require  special  mention. 

In  Tennessee  an  effort  was  made  during  1895  to  prohibit  the 
insurance  of  children  ander  twelve  years  of  age.  The  Insurance 
Committee  of  the  Legislature  gave  a  number  of  hearings  on  the 
subject,  and  convincing  facts  were  presented  by  the  companies, 
on  the  basis  of  which  it  was  not  considered  expedient  to  legislate 
adversely  to  the  business.  Without  going  extensively  into  an 
interesting  phase  of  insurance  legislation,  I  may  add  that,  in 
response  to  a  circular  of  inquiry  addressed  to  a  large  number  of 
well-known  practicing  physicians,  charitable  agents  and  health 
officers  in  the  cities  of  Tennessee  and  Kentucky,  asking  for  an 
expression  of  opinion  on  the  subject  of  insurance  of  minors, 
numerous  replies  were  received,  all  more  or  less  strongly  in  favor 
of  the  system.  The  letters  were  presented  to  the  Tennessee 
Legislature,  and  I  quote  a  few  of  the  characteristic  statements 
to  show  what  experienced  and  intelligent  men  thought  of  the 
business  at  the  time.  Dr.  Edwin  Hawes,  agent  of  the  Louisville 
Charity  Organization  Society,  expressed  the  emphatic  opinion, 
based  on  personal  experience,  that — ' '  The  result  of  my  investi- 
gation was  that  I  became  thoroughly  satisfied  that  Industrial 
insurance  was  a  great  blessing  to  the  people.  It  has  enabled 
great  numbers,  under  my  own  observation,  to  bury  their  dead 
without  having  to  call  on  the  public  for  help  as  dependents  on 
the  city  authorities.  I  have  never  heard  of  a  single  case  where 
there  was  the  least  cause  of  suspicion  of  foul  play  in  the  sickness 
or  death  of  an  insured  child. ' '  Dr.  Thomas  L.  McDermott,  Presi- 
dent of  the  Louisville  Academy  of  Medicine,  stated  that — "In  my 
experience,  which  is  large,  I  have  nothing  to  say  but  to  commend 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l894~'96.      217 

the  insurance  of  children,  especially  among  the  lower  classes,  as 
it  really  furnishes  the  means  of  securing  medicines,  burial,  etc.  I 
have  not,  in  a  single  case,  seen  anything  wrong  in  the  management 
of  these  cases. ' '  Dr.  R.  L.  Vaught,  Professor  of  Anatomy,  Chatta- 
nooga Medical  College,  stated  that — "  I  have  been  engaged  in  the 
active  practice  of  medicine  in  the  city  of  Chattanooga  for  eight 
years,  and  among  the  people  I  have  served  professionally  have  been 
many  who  carried  what  is  known  as  Industrial  insurance  upon 
the  lives  of  their  children,  and  I  have  never  yet  known  of  a  case 
of  abuse  or  neglect  of  such  children  by  reason  of  a  desire  upon 
the  part  of  the  parents  to  secure  the  insurance  money. ' '  Among 
others  approving  of  the  system  were  Dr.  W.  P.  White,  Health 
Officer  of  Louisville  ;  Dr.  F.  S.  Reynolds,  County  Health  Officer 
of  Memphis,  and  Mr.  Thomas  H.  Taylor,  Chief  of  Police  of  the  city 
of  Louisville.  Mr.  Taylor  said  that — ''During  the  whole  of  my 
incumbency  in  office  I  have  never  known  or  heard  of  a  case  where 
parents  or  others  were  either  charged  or  suspected  of  abuse  or  mal- 
treatment of  their  children  for  the  purpose  of  getting  the  proceeds 
of  insurance  on  their  lives.  If  such  had  been  the  case  in  this  city, 
I  feel  sure  it  would  have  been  brought  promptly  to  my  attention. ' ' 

Influenced,  no  doubt,  by  the  large  body  of  evidence  furnished 
by  the  Industrial  insurance  companies,  the  Legislature  of  Tennes- 
see, after  careful  investigation,  refused  to  interfere  in  any  manner 
with  the  business  of  Industrial  insurance. 

The  attempt  made  in  Massachusetts  this  year  to  prohibit  the 
insurance  of  children  under  ten  years  of  age  was,  however,  un- 
questionably the  most  determined  effort  ever  made  to  interfere  with 
an  essential  and  integral  part  of  the  business  of  Industrial  insur- 
ance companies.  An  organized  and  unusually  determined  effort 
was  made  by  certain  members  of  the  Society  for  the  Prevention  of 
Cruelty  to  Children,  and  lengthy  hearings  were  granted  by  the 
Legislature  to  both  sides  of  the  controversy.*  Among  others, 


*  The  opposition  to  the  insurance  of  children,  on  the  part  of  this 
society,  was  in  marked  contrast  to  an  earlier  view  expressed  in  the  annual 
report  for  1891,  where  it  was  stated  that — "  We  find  in  English  reports  that 
parents  are  charged  with  insuring  the  lives  of  their  children  in  order,  by 
neglect,  if  by  no  worse  crime,  to  destroy  the  child  to  secure  the  insurance. 
We  have  taken  pains  to  inquire  into  this  practice  here,  but  have  found  no 
evidence  of  such  intent,  although  many  insure  their  children's  lives  and  use 
the  proceeds,  in  case  of  death,  to  provide  for  funeral  expenses."  (p.  n.) 


218 


HISTORY   OF  THE   PRUDENTIAL. 


Mr.  Dryden  appeared  before  the  Insurance  Committee  and  pre- 
sented a  comprehensive  statement  of  carefully  collected  data  and 
statistics  tending  to  show  that,  as  far  as  the  Company  had  been 
able  to  learn,  there  was  no  evidence  that  the  business  was  detri- 
mental to  public  policy,  but  that,  to  the  contrary,  there  was  an 
abundance  of  proof  tending  to  show  that  Industrial  insurance 
was,  in  all  respects,  an  agency  making  for  the  promotion  of  thrift 
and  the  general  welfare  of  the  industrial  population.* 

Mr.  Dryden  first  called  attention  to  the  fact  that  the  actual 
mortality  experience  of  The  Prudential,  during  the  eleven  years 
1 88 3-' 93,  of  children  aged  one  to  nine  had  been  more  favorable 
than  the  expected  mortality  by  the  life  table  on  which  the  Com- 
pany's rates  were  based  :— 

COMPARISON  OF  THE   PRUDENTIAL   MORTALITY   EXPERIENCE 
WITH   FARR'S   ENGLISH   LIFE  TABLE. 

AGES  i  TO  9. 


AGE. 

PRUDENTIAL  EXPERIENCE, 
ELEVEN  YEARS. 

ENGLISH  I/IFE  TABLE 

(1883-1893.) 

No.  3. 

I 

61.55 

65-59 

2 

30-35 

36.14 

3 

20.35 

24-33 

4 

I5-23 

17.92 

11.85 

13-53 

6 

9.04 

10.75 

I 

6.92 
6.10 

9.16 
7-69 

9 

5-40 

6.57 

It  will  be  observed  that,  at  every  age  under  consideration, 
the  mortality  experience  of  The  Prudential  was  lower  than  that 
shown,  by  Farr's  Table  No.  3,  to  obtain  among  the  general  popu- 
lation. Mr.  Dryden  pointed  out  that  it  could  not  be  argued  that 
insured  children  represented  selected  lives,  since  the  Company 
did  not  make  use  of  medical  examinations  for  children  under  the 


*  Those  interested  in  the  history  and  practice  of  Industrial  insurance 
companies  should  address  the  Secretary  of  the  Company  for  a  copy  of  Mr. 
Dryden's  "  Statement,"  which  forms  one  of  the  really  important  and  perma- 
nently useful  contributions  to  Industrial  insurance  history. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l894~'96.      219 

age  of  ten  years.  Rather  to  the  contrary,  a  higher  mortality 
of  insured  children  should  be  expected,  since  the  children  of  the 
general  working  population  were  subject  to  a  much  higher  death- 
rate  than  the  well-to-do  or  the  rich.  The  argument  was  further 
supported  by  abundant  statistical  data  for  Massachusetts  and 
other  New  Kngland  States,  showing  that  there  had  been  a  very 
material  decrease  in  the  mortality  of  children  since  the  introduc- 
tion of  Industrial  insurance. 

To  clear  away  a  very  serious  misunderstanding  met  with 
among  those  who  had  not  studied  carefully  the  question  of  Indus- 
trial insurance,  Mr.  Dryden  pointed  out  that  the  average  amount 
paid  on  claims  on  policies  under  the  age  of  nine  had  only  been 
$24. 74.  I  copy,  in  part,  the  table  presented  by  Mr.  Dryden  to 
show  the  average  amount  paid  on  claims  at  various  ages  during 
the  period  1890-' 94  : — 

THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 

CLAIMS  PAID  DURING  FIVE  YEARS  (1890  to  1894)  ON  INFANTILE 
POLICIES,  AGES  i  TO  9. 


AGE  AT  DEATH. 

NUMBER  OF 
CLAIMS. 

AMOUNT  OF 
CLAIMS. 

AVERAGE 
CLAIM. 

I-  2 

3>934 

$76,645  oo 

$19  48 

2-  3 

5.772 

114,725  oo 

19  88 

3-  4 

4,091 

91,768  oo 

22   43 

4-  5 

3.078 

78,064  oo 

25  36 

5-6 
6-  7 

2,417 

2,OII 

73,895  oo 
72,422  oo 

30  57 
36  01 

7-8 

1,607 

68,529  oo 

42  64 

8-9 

1,203 

61,050  oo 

50  75 

9-10 

984 

58,984  oo 

59  94 

In  commenting  upon  the  table  Mr.  Dryden  well  said  that 
"At  the  tender  ages,  when  there  would  be  danger,  if  danger 
existed,  which  we  deny,  the  amount  is  so  small  as  to  be 
insufficient  for  burial  expenses,  to  say  nothing  of  medical 
attendance,  medicine,  and  other  necessary  disbursements  in 
such  cases. ' '  * 


*  The  cost  of  funerals  varies  with  different  localities.  Customs  and 
circumstances  have  much  to  do  with  the  actual  outlay,  and  it  is  very 
difficult  to  discuss  the  question  of  funeral  expenses  of  children,  on  the 


220 


HISTORY   OF  THE   PRUDENTIAL. 


Additional  proof  that  the  insurance  of  children  was  not  det- 
rimental to  child  life  was  furnished  by  a  table  supplied  by  Mr. 
Dry  den,  which  shows  the  comparative  mortality  of  adults  and 
children  as  to  the  expected  and  the  actual  loss  for  each  group 
of  risks  : — 

MORTALITY    EXPERIENCE    OF    THE    PRUDENTIAL    INSURANCE 
COMPANY  OF  AMERICA. 

COMPARISON  OF  INFANTILE  AND  UNEXAMINED  ADUI/T  POLICIES.    POLICIES 
IN  FORCE  LESS  THAN  ONE  YEAR. 

Expected  and  Actual  L,oss  on  each  $1,000,000  Exposed  to  Risk  of  Death. 


CLASS  OF  RISKS. 

EXPECTED  L,oss, 
FARR  TABLB  No.  3. 

ACTUAL  Loss. 

RATIO 
ACT.  TO  EXP. 

Adult      .... 

$12  741    OO 

4j7  /147   OO 

TQC   r 

Infantile    .    . 

jc  6l7   OO 

1  3  046  oo 

8*  a 

°O'O 

From  this  table  it  is  quite  clear  that,  while  the  actual  mor- 
tality of  adults  exceeded  the  expected  mortality  in  the  ratio  of 
105.5  to  every  $100,  the  ratio  of  infantile  claims  was  only  83.5 
to  every  $100  of  expected  loss.  Hence,  as  far  as  the  Com- 
pany's experience  was  able  to  disclose  possible  detrimental 
conditions,  it  had  clearly  been  proven,  on  the  basis  of  actuarial 
testimony  of  unquestioned  value,  that  the  practice  of  the  com- 
panies was  not  adverse  to  the  interests  of  insured  children  or  the 
general  population.  Mr.  Dry  den  concluded  his  argument  with  a 


basis  of  statistics,  but  it  may  be  of  interest  to  the  reader  to  learn  that  in 
the  city  of  Newark,  N.  J.,  the  cost  of  burial,  including  the  grave  and  what 
is  usually  looked  upon  as  the  common  decencies,  is  $25  at  age  one,  $35 
at  age  five  and  $50  at  age  ten.  These  amounts  correspond  very  closely 
with  the  average  sums  paid  at  the  death  of  insured  children  in  the  expe- 
rience of  The  Prudential.  In  the  city  of  New  York  the  lowest  cost  of 
funerals  for  children  under  the  age  of  four  is  stated  to  be  from  $12  to 
$18,  but  the  actual  average  cost  is  no  doubt  higher,  at  least  where  a  little 
more  than  the  barest  necessity  is  provided.  If  to  these  items  is  added 
the  cost  of  the  last  illness  and  the  extra  expenses  incident  to  a  death  in 
a  family,  it  will  be  apparent  that  the  amounts  paid  by  Industrial  compa- 
nies, at  the  death  of  children,  are  not  more  than  sufficient  to  meet  the  actual 
cost  of  burial  and  last  illness. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l894-'96.       221 

number  of  quotations  from  an  exceptionally  able  work  on  ' '  The 
English  Poor,"  by  Mr.  Thomas  Mackay,  to-day  recognized  as  one 
of  the  highest  authorities  on  Hnglish  Poor  Law  administration 
and  the  social  and  economic  conditions  of  the  people.*  Mr.  Mac- 
kay considered  the  subject  of  Industrial  insurance  in  an  entire 
chapter  of  the  work  referred  to,  but  I  must  needs  limit  myself 
to  a  few  brief  extracts  which  will  indicate  the  results  of  his  ex- 
tensive personal  investigations  : — 

It  is  not  too  much  to  say  that  the  country  owes  a  great  debt  of  gratitude 
to  these  institutions.  They  have  kept  alive,  during  a  very  dark  period  of 
working-class  history,  some  small  interest  in  the  principle  of  insurance, 
some  respect  for  this  valuable  expedient  of  survival  amid  the  dangers  of 
civilized  life. 

The  philanthropists  complain  that  these  insurances  rarely  provide  any- 
thing more  than  a  funeral  benefit.  But,  we  ask,  have  not  these  very  philan- 
thropists been  parties  to  the  conspiracy  which  has  taught  men  that  the 
State  will  give  a  pension  to  their  wives  and  children  when  they  die  ?  By  a 
miracle  the  poor  man's  abhorrence  of  a  pauper  funeral  has  survived  the 
machinations  of  the  philanthropist.  On  this  not  too  hardy  instinct  of  inde- 
pendence the  commercial  companies  have  had  to  work.f 

With  a  fatuity  which  is  almost  incredible,  well-meaning  philanthropists 
have  endeavored  to  disparage  the  work  of  these  societies,  because  forsooth  they 
adapt  themselves  to  the  necessity  of  the  case  and  collect  the  premiums 
weekly  by  house-to-house  visitation. 

As  has  previously  been  stated,  the  subject  was  considered  in 
all  its  bearings,  the  facts  were  fully  set  forth,  the  members  of  the 
Legislature  were  fully  informed  as  to  the  merits  of  the  contro- 
versy, and  the  proposed  law  prohibiting  the  insurance  of  children 
under  ten  failed  of  passage  by  the  overwhelming  vote  of  149 
members  in  favor  of  Industrial  insurance  against  23  members 
opposed  to  it.  The  conclusion  is  therefore  warranted  that  this 
vote,  following  as  it  did  upon  the  most  extensive  investigation 
ever  made  into  Industrial  insurance  in  this  country,  is  a  positive 
endorsement  of  the  entire  scheme  of  Industrial  family  insurance 


*  Published  by  John  Murray,  London,  1889. 

t"We  need  measures  which  shall  increase  individual  responsibility 
rather  than  diminish  it ;  measures  which  shall  give  us  more  self-reliance 
and  less  reliance  on  society  as  a  whole.  We  cannot  afford  to  countenance  a 
system  of  morals  or  law  which  justifies  the  individual  in  looking  to  the 
community  rather  than  to  himself  for  support  in  age  or  infirmity. ' '  (Arthur 
T.  Hadley,  "Economics,"  p.  63.) 


222,  HISTORY  OF  THE   PRUDENTIAL. 

as  it  is  carried  on  at  the  present  day.*  That  Mr.  Dry  den' s  remarks 
carried  weight  with  those  who  were  anxious  to  consider  with 
justice  and  fairness  both  sides  of  the  controversy  is  perhaps  best 
illustrated  by  the  following  extract  from  the  Insurance  Herald 
under  date  of  May  30,  1895  : — 

Of  the  literature  which  the  contests  evoked  the  statement  of  President 
John  F.  Dryden,  of  The  Prudential,  made  before  the  Committee  of  the  Massa- 
chusetts Legislature  is  the  most  valuable  contribution  to  the  general  knowl- 
edge of  industrial  insurance  and  its  progress  that  has  yet  been  made.  It  is  a 
complete  answer  to  the  sentimental  charges  that  have  been  trumped  up 
against  the  practice  of  insuring  each  child  in  the  general  scheme  of  family 
insurance.  President  Dryden's  statement  has  been  issued  in  pamphlet  form, 
and  a  copy  of  it  should  be  placed  in  the  hands  of  every  official  connected 
with  public  and  private  charity  organizations.  These  bodies  could  perform 
no  greater  work  for  the  general  good  than  to  spread  the  practical  gospel  of 
industrial  insurance  among  the  poor  as  the  stepping-stone  to  self-reliance 
and  proper  pride.  By  a  careful  study  of  the  pamphlet  they  would  them- 
selves perceive  the  great  benefit  that  industrial  insurance  is  conferring  upon 
the  American  people.  Mr.  Dryden  deserves  the  thanks  of  all  his  colleagues 


*  The  large  majority  vote  cast  in  favor  of  the  system  of  family  in- 
surance, and  against  a  measure  tending  to  prohibit  an  integral  part  of  the 
business,  is  of  special  significance  in  this  case.  It  has  well  been  said  of 
such  public  approval,  when  expressed  by  the  vote  of  a  decisive  majority, 
that  "To  responsible  politicians  the  course  to  be  pursued  will  depend 
mainly  on  fluctuating  conditions  of  public  opinion.  Restrictions  will  be 
imposed,  but  only  when  and  as  far  as  they  are  supported  by  a  genuine 
public  opinion.  It  must  not  be  a  mere  majority,  but  a  large  majority; 
a  steady  majority  ;  a  genuine  majority  representing  a  real  and  earnest 
desire,  and  especially  in  the  classes  who  are  most  directly  affected ;  not  a 
mere  factitious  majority  such  as  is  often  created  by  skillful  organization  and 
agitation  ;  by  the  enthusiasm  of  the  few  confronting  the  indifference  of  the 
many.  In  free  and  democratic  States  one  of  the  most  necessary  but  also 
one  of  the  most  difficult  arts  of  statesmanship  is  that  of  testing  public 
opinion,  discriminating  between  what  is  real,  growing  and  permanent,  and 
what  is  transient,  artificial  and  declining.  As  a  French  writer  has  said, 
'  The  great  art  in  politics  consists  not  in  hearing  those  who  speak,  but  in 
hearing  those  who  are  silent.'  "  (William  Edward  Hartpole  Lecky,  "The 
Map  of  Life,"  p.  140.  Longmans,  Green  &  Co.,  New  York,  1809.)  To  these 
words  of  Mr.  Lecky  the  writer  would  add  that  the  masses,  who  as  a  rule 
have  been  silent  when  the  most  unwarranted  charges  have  been  made 
against  their  intelligence  and  morality,  will  not  fail  to  assert  themselves  in 
a  manner  wholly  unexpected  by  those  whose  slight  knowledge  of  the 
people  forbids  a  more  intelligent  appreciation  of  the  efforts  and  struggles 
of  the  working  people. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l894~'96.       223 

for  his  clear,  direct  and  forcible  demonstration  of  the  public  value  of  the 
scheme  of  family  insurance  which  he  represents  in  his  great  company. 

A  further  endorsement  of  the  practice  of  Industrial  com- 
panies is  to  be  found  in  the  annual  report  of  the  Insurance 
Commissioner  of  Connecticut  for  the  year  1895,  where  it  is 
pointed  out  that — 

Charges  of  gross  neglect  and  even  murder  of  children,  for  the  sake  of 
the  insurance  upon  their  lives,  are  of  too  serious  a  character  to  be  over- 
looked. These  charges,  however,  are  as  easy  to  make  as  they  are  difficult  to 
prove,  but  until  they  are  supported  by  proof  they  should  have  no  influence 
upon  our  judgment.  I  do  not  know  of  any  facts  which  prove  such  a  con- 
clusion, and  I  have  been  unable  to  find  any  case  where  a  child  has  been 
murdered  for  the  sake  of  the  insurance  upon  its  life.  On  the  other  hand, 
the  testimony  is  that  such  insurance  makes  the  parents  thrifty  and  provident, 
and  statistics  show  that  the  rate  of  mortality  among  insured  children  is  less 
than  the  rate  among  children  generally. 

Other  valuable  contributions  with  special  reference  to  the 
insurance  of  children  were  made  this  year  by  Dr.  Hugh  R. 
Jones,  in  his  prize  essay  on  the  ' '  Perils  and  Protection  of  Infant 
Life, ' '  published  in  the  '  'Journal  of  the  Royal  Statistical  Society, ' ' 
Vol.  lyVII.  Dr.  Jones  concluded  his  observations  with  the 
remark  that — "  I  have  briefly  reviewed  the  more  important  evi- 
dence existing  on  the  subject.  I  have  weighed,  as  carefully  as 
I  am  able,  all  the  information  I  have  gathered.  I  have  discussed 
the  subject  with  medical  men  resident  in  districts  where  insur- 
ance prevails  extensively,  and  my  own  conclusion  is  that  the 
evils  of  child  insurance  have  been  unnecessarily  exaggerated. 
#  *  *  #  >pne  incentive  to  child-neglect  and  child-murder  is 
not  the  prospective  receipt  of  insurance  money.  *  *  *  * 
Cases  of  neglect  are  more  frequent,  into  which  the  element  of 
insurance  does  not  enter,  than  those  upon  which  it  is  supposed  to 
exercise  influence."  Other  valuable  papers  on  child  life  insur- 
ance were  read  by  Mr.  J.  Moon  and  Mr.  W.  H.  Aldcroft,  before 
the  Insurance  Institute  of  Manchester,  Kngland,  which  also  form 
valuable  contributions  to  our  knowledge  of  the  subject.* 

*  Few  men  have  had  better  opportunities  to  study  scientifically  the 
various  aspects  of  the  question  of  life  insurance  for  minors  than  Mr.  David 
Parks  Fackler,  for  many  years  the  Actuary  of  the  New  Jersey  Insurance 
Department,  Consulting  Actuary  to  many  life-insurance  companies  and  one 


224  HISTORY   OF  THE   PRUDENTIAL. 

The  concensus  of  opinion  of  those  who  investigated  the 
subject  most  carefully,  and  who  relied  upon  the  only  basis  of 
fact  which  should  be  taken  into  account  in  any  legislation  upon 
the  subject, — that  is,  the  statistical  evidence  supplied  either  by 
the  companies  or  the  government, — was  therefore  in  favor  of  the 
practice  of  the  companies,  and  it  may  be  asserted  with  confidence 
that  legislators  and  others  will  continue  to  take  into  considera- 
tion the  evidence  and  the  body  of  facts  on  which  the  Industrial 
companies  rest  their  side  of  the  argument. 

The  business  progress  of  the  year  1895  was>  no  doubt, 
partly  interfered  with  by  the  large  number  of  attempts  at  ad- 
verse legislation  to  which  reference  has  been  made.  There  was 
also  a  natural  reaction  after  the  previous  year's  operations,  and 
the  increase  made  in  policy-holders  during  the  year  1895  was 
materially  below  the  average.  However,  while  many  other  com- 
panies experienced  a  decrease  in  the  total  amounts  of  insurance 
in  force,  The  Prudential  succeeded  not  only  in  holding  its  own, 
but  in  adding  almost  75,000  Industrial  policy-holders  to  its  already 
large  number  of  patrons.  Noting  briefly  the  condition  of  the 
!  Company  under  date  of  December  31,  1895,  tne  annual  report 
states  that  the  total  number  of  policy-holders  had  now  reached 
'  2,330,741,  for  an  aggregate  amount  of  $268,414,100  of  Industrial 
insurance  protection.  In  the  Ordinary  department  the  number  of 
policy-holders  had  increased  to  30,893  for  $34,716,055  of  insur- 
ance protection.  The  finances  of  the  Company  were  in  an 

time  President  of  the  Actuarial  Society  of  America.  Under  date  of  March 
19,  1895,  Mr.  Fackler  addressed  a  long  letter  on  the  subject  to  the  editor 
of  the  Weekly  Underwriter,  from  which  I  make  a  brief  extract:— 

<c  I  well  remember  how  much  concern  I  myself  felt  some  fifteen  years 
ago,  when  infantile  insurance  was  first  introduced  in  this  country,  lest  it 
should  prove  an  incentive  to  child  murder,  as  is  now  claimed  periodically 
by  people  all  over  the  land. 

"My  own  doubts  on  the  subject  were  purely  theoretical,  and  were 
entirely  dispelled  by  the  a  priori  considerations  that  the  insurance  on  poor 
children  may  often  be  the  means  of  saving  their  lives,  because  when  they 
are  very  sick  their  recovery  is  often  only  a  question  of  whether  they  can 
have  proper  medical  attendance  and  nourishing  food,  and  if  the  parents  are 
very  poor  they  may  fear  to  incur  desirable  medical  or  other  expenses,  lest 
they  should  prove  ineffectual  and  be  followed  also  by  a  heavy  funeral  outlay. 
But  when  the  child  is  insured  there  is  little  reason  to  fear  about  making  the 
necessary  expenditures,  for  if  the  doctor  can  do  no  good,  all  the  expenses 
will  be  covered  by  insurance." 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l894~'96.      225 

excellent  condition,  and  considerable  progress  had  been  made  in 
establishing  more  firmly  the  business  already  on  the  books  of  the 
Company. 

The  watch- word  of  The  Prudential,  as  given  to  the  field  force 
in  the  annual  address  of  the  President,  was  concisely  stated  in  the 
words  that  ' '  The  business  that  stays  is  the  business  that  pays^ ' ' 
and  more  stringent  orders  than  had  ever  previously  been  issued 
were  sent  out  to  superintendents,  assistants  and  agents  to  put  forth 
every  effort  to  reduce  the  lapse-rate  and  encourage  policy-holders 
to  keep  their  policies  in  force.  The  year  was  one  during  which 
many  internal  improvements  were  introduced  into  the  practice  of 
the  Company,  which,  however,  for  want  of  space,  can  only  be 
briefly  discussed. 

With  the  beginning  of  the  new  year  The  Prudential  intro- 
duced a  number  of  new  features  in  its  Industrial  policy  con- 
tracts, the  most  important  of  which  was  a  radical  change  in 
the  table  of  benefits  for  ages  under  ten  years.  A  copy  of  the 
new  table  is  given  below,  together  with  the  necessary  explana- 
tory information  : — 


THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 
TABLE  OF  INFANTILE  BENEFITS,  FOR  A  WEEKLY  PREMIUM  OF  5  CENTS. 


BENEFIT  PAYABLE  IF  POLICY  HAS 
BEEN  IN  FORCE  FOR 

AGE  NEXT  BIRTHDAY  WHEN  POLICY 
is  ISSUED. 

2 

3 

$9 

IT 
14 
I? 
2O 
24 
29 
51 

75 

100 
120 

4 

5 

$n 
14 
18 
24 
29 
43 
65 
95 

120 

6 

7 

8 

9 

$20 
28 
50 

75 

120 

$8 

10 
12 
15 
17 
2O 
24 
29 

55 
80 

100 
120 

$10 

'i36 

20 
24 
29 

47 
70 

IOO 
120 

$12 

16 

22 
29 

39 
60 
90 
1  20 

$14 

'9 
26 

35 
55 
85 
1  20 

$16 

22 

35 

£ 

120 

More  than  3  mos.  ,  but  less  than  6  mos.  , 
More  than  6  mos.  ,  but  less  than  9  mos.  , 
More  than  9  mos.  ,  but  less  than  i  year, 
One  year,    .    .       

Two  years                           

Three                                     ... 

Four                         •            ••  

Five                                

Six                                  

Seven                      

Eisrht 

Twice  the  above  amounts  will  be  paid  for  a  weekly  premium  of  10  cents  ; 
but  no  higher  premium  than  10  cents  will  be  taken. 


226  HISTORY   OF  THE   PRUDENTIAL. 

Under  this  table  higher  benefits  were  payable  at  the  younger 
ages  than  had  been  the  practice  since  1887,  when  the  last  rate 
tables  had  been  adopted,  and  the  somewhat  complex  and  involved 
points  are  best  brought  out  in  the  following  extract  from  the 
Spectator  of  December  26,  1895: — 

The  new  infantile  table  gives  larger  benefits  than  under  the  existing 
scale,  after  the  age  of  six  years  is  reached,  and  finally  the  benefit  increases 
to  1 1 20  at  age  nine  [ten  next  birthday].  This  is  the  maximum  amount 
purchasable  for  the  five-cent  premium.  The  conditions  of  benefits  during 
the  first  year  are  such  that  those  who  were  insured  at  ages  below  six  and 
who  are  persistent  in  their  payments  derive  more  from  their  policies,  in 
event  of  death,  than  the  one  insured  later  on  at  the  advanced  age.  Thus, 
there  is  a  reward  for  persistency  under  this  plan  which  the  previous  policies 
did  not  give.  *  *  *  *  The  companies  have  done  wisely  in  deciding  not 
to  accept  a  higher  premium  than  ten  cents  on  infantile  lives,  and  must  be 
congratulated  on  their  decision  to  make  it  an  object  to  insure  when  young, 
and  keep  policies  in  force  because  of  their  increasing  value.  The  new 
arrangement  as  regards  infantile  policies  is  made  retroactive  when  the 
amounts  insured  at  the  new  rate  are  greater  than  under  present  policies. 

The  Insurance  Monitor  of  1896  also  commented  upon  the 
change  as  follows  : — 

With  the  beginning  of  the  new  year  a  change  was  made  in  the  rate 
tables  of  the  industrial  companies  almost  radical  in  its  character.  When 
this  business  was  first  introduced  into  this  country  from  England,  some 
twenty  years  ago,  almost  nothing  was  known  of  the  distinctive  mortality 
prevailing  among  our  industrial  classes.  The  chief  reliance  was  on  the 
experience  of  the  British  Prudential,  aided  by  such  general  observations  on 
mortality  in  America  as  were  furnished  by  the  census  and  the  experience  of 
the  ordinary  companies. 

But  neither  of  these  two  latter  sources  could  furnish  any  safe  guide  for 
a  business  so  exceptional  in  its  character.  Besides  this,  infantile  insurance 
had  never  been  attempted ;  there  was  no  such  thing  as  a  reliable  infantile 
mortality  experience  in  America.  Nor  was  it  possible  to  say  what  would  be 
the  cost  of  conducting  a  business  under  conditions  so  widely  divergent  from 
those  existing  in  England. 

So  it  necessarily  happened  that  the  original  rate  tables  were  largely 
tentative.  But  being  once  adopted  and  found  on  the  whole  to  harmonize 
fairly  with  existing  conditions,  they  were  naturally  adhered  to  with  minor 
modifications.  The  question  was  of  less  moment  than  it  would  otherwise 
have  been,  from  the  fact  that  industrial  insurance  is  essentially  family 
insurance.  It  takes  the  children  with  the  parents  and  the  premiums  are 
paid  by  the  old  folks.  An  inequality  of  rates  tends  in  a  measure  to  adjust 
itself. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l894~'96.       227 

But  this  is  true  only  in  a  measure,  and  the  extent  of  the  adjustment 
must  depend  on  the  distribution  both  of  ages  and  policies  in  the  family 
group.  The  companies  have  now  secured  an  experience  which  can  be  relied 
on  in  the  future,  and,  taking  that  experience  as  a  basis,  a  far  more  liberal 
rate  table  has  been  the  result  at  all  infantile  ages,  while  equity  has  been 
established  as  thoroughly  as  in  the  ordinary  branch. 

A  very  important  point  to  which  brief  reference  is  made  in 
the  Spectator  article  was  the  voluntary  restriction  of  premiums 
011  lives  under  twelve  to  ten  cents  per  week,  irrespective  of  the 
fact  whether  the  child  had  been  insured  with  one  or  more  com- 
panies. The  clause  which  forms  part  of  every  Prudential  Indus- 
trial policy  reads  as  follows  : — 

This  Policy  shall  be  void  if  there  is  in  force  upon  the  life  of  the  Insured 
an  Industrial  Policy  previously  issued  by  this  Company,  unless  the  Policy 
first  issued  contains  an  endorsement,  signed  by  the  President  or  Secretary, 
authorizing  this  Policy  to  be  in  force  at  the  same  time  ;  or  if  the  person 
insured  is  under  twelve  years  of  age  next  birthday,  and  is  now  or  may  here- 
after be  insured  while  under  such  age  in  this  or  any  other  company,  and  the 
total  premiums  on  such  insurances  shall  exceed  ten  cents  per  week.  If  for 
any  cause  this  Policy  be  or  become  void,  all  premiums  paid  thereon  shall  be 
forfeited  to  the  Company  except  as  provided  herein. 

This  clause  effectually  did  away  with  all  reasonable  objections 
to  the  practice  of  Industrial  companies  in  accepting  small  risks 
on  the  lives  of  children,  as  under  this  provision  children  could 
not  be  insured  for  more  than  a  ten-cent  premium,  granting  at 
the  highest  ages  a  sum  only  sufficient  to  meet  the  reasonable  cost 
of  burial  and  the  expenses  of  the  last  illness. 

A  new  adult  rate  table  was  also  introduced  this  year  (1896), 
of  which  the  following  is  an  abbreviated  copy,  showing,  for 
certain  ages,  the  amounts  to  be  paid  at  death  in  return  for  certain 
specified  weekly  premiums.  It  will  be  observed,  on  examination 
of  this  table,  that  there  are  certain  limitations  at  the  younger  and 
at  the  more  advanced  ages,  which  make  speculative  insurance,  at 
these  ages,  impossible.  Thus,  for  example,  at  age  fourteen  no 
higher  premium  than  twenty  cents  per  week  will  be  accepted  ; 
at  age  twenty-three  the  premium  limit  is  thirty  cents ;  at  age 
thirty-eight,  forty-five  cents  ;  at  age  fifty-one,  forty  cents,  and  at 
age  sixty-five,  thirty-five  cents.  The  table  here  given  in  abbrevi- 
ated form  is  the  one  now  in  use  by  the  Company,  but  the  amounts 
payable  are  subject  to  increased  benefits,  cash  dividends  and 


228 


HISTORY   OF  THE   PRUDENTIAL. 


surrender  privileges  which  materially  enhance  the  value  of  these 
policies  :— 

THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 
ADULT  RATE  TABLE. 


WEEKLY  PREMIUMS  OF 

AGE  NEXT 

5 

10 

15 

20 

25 

30 

35 

40 

45 

5° 

55 

60 

65 

BIRTHDAY. 

CTS. 

CTS. 

CTS. 

CTS. 

CTS. 

CTS. 

CTS. 

CTS. 

CTS. 

CTS. 

CTS. 

CTS. 

CTS. 

$ 

$ 

10 

1  2O 

240 

$ 

$ 

15 

I03 

206 

309 

412 

1 

2O 

87 

174 

26  [ 

348 

435 

$ 

25 

76 

152 

228 

304 

380 

456 

$ 

3« 

67 

134 

201 

268 

335 

402 

469 

$ 

35 

59 

118 

177 

236 

295 

354 

413 

472 

$ 

40 

50 

100 

150 

2OO 

250 

300  350 

400 

450 

1 

$ 

45 

42 

84 

126 

168 

210 

252 

294 

336 

378 

420 

462 

$ 

$ 

50 

35 

70 

105 

140 

175 

2IO 

245 

280 

315 

350 

385 

420 

455 

55 

28 

56 

84 

112 

140 

1  68 

I96 

224 

60 

22 

44 

66 

88 

1  10 

132 

154 

I76 

65 

17 

34 

51 

68 

85 

102 

119 

70 

13 

26 

39 

52 

65 

78 

91 

Another  very  important  concession  made  this  year  to  the 
Industrial  policy-holder  of  The  Prudential  was  a  provision  printed 
in  red  at  the  bottom  of  each  policy  stating  that — 4<  This  Policy, 
if  not  satisfactory  to  the  Insured,  may  be  surrendered  within  two 
weeks  after  its  date  at  the  office  of  the  Superintendent,  whose  name 
appears  on  the  premium  receipt  book  accompanying  this  Policy, 
and  the  premiums  paid  thereon  will  be  returned  to  the  Insured. ' ' 
Under  this  provision  it  is  now  possible  for  prospective  applicants  to 
carefully  examine  their  policies  during  a  period  of  two  weeks,  and 
then,  if  not  satisfactory,  return  the  same  to  the  Company,  receiv- 
ing in  full  the  premiums  paid  during  the  period.  Considering  the 
large  number  of  transactions,  it  must  be  self-evident  that  this  con- 
cession implies  a  considerable  money  loss  to  the  Company,  volun- 
tarily incurred  to  increase  the  popularity  of  the  business  and 
extend  the  equitable  basis  on  which  The  Prudential  from  the 
beginning  had  transacted  this  form  of  insurance. 

A  still  further  concession  was  made  to  policy-holders  this 
year,  in  a  matter  which  for  many  years  past  had  been  one  of  the 


THK  PRUDENTIAL  INS.  CO.  OE  AMERICA,  1 894-' 96.      2 29 

most  difficult  questions  with  which  Industrial  companies  had  had 
to  deal.  Since  October  i,  1884,  the  Industrial  policies  had  con- 
tained a  clause  restricting  the  liability  of  the  Company  to  one-half 
of  the  full  amount  of  the  face  value  of  the  policy  in  case  the  insured 
died  from  consumption  during  the  first  policy  year.  This  restric- 
tion had  been  made  necessary  by  the  fact  that  no  medical  examina- 
tion was  required  under  policies  for  less  than  $200,  and  while  the 
application  signed  by  the  agent  contained  questions  and  inquiries 
with  special  reference  to  the  present  and  past  health  of  the  applicant 
and  his  or  her  family  history,  nevertheless  a  considerable  amount 
of  adverse  selection  in  this  direction  was  experienced  among  Indus- 
trial policy-holders.  Similar  reasons  influenced  the  Company  in 
its  early  practice  in  restricting  its  liability  where  death  was  due  to 
suicide. 

In  suicide  cases  the  practice  at  first  had  been  to  void  the 
policy  entirely,  but  in  1884  this  had  been  changed  to  a  three-year 
period  of  policy  continuance,  and  this  period  had  been  changed 
to  two  years  in  1895  ;  but,  to  make  the  contract  as  free  from 
technical  restrictions  as  possible,  the  Company  this  year  elimi- 
nated the  suicide  clause  from  the  Industrial  contract,  which  is 
now  practically  as  free  as  possible  from  burdensome  restrictions. 

Thus,  by  1896  the  Company  had  so  far  extended  its  liberal 
policy  that  Industrial  policy-holders  were  practically  on  the  basis 
of  policy-holders  in  the  Ordinary  department.  Whatever  re- 
mained to  be  done  to  improve  the  contract  was  accomplished 
during  the  next  few  years,  when  further  concessions,  made  prac- 
ticable and  possible  in  the  light  of  more  recent  experience,  have 
removed  most  of  the  remaining  earlier  restrictions. 

While  the  year  was  one  during  which  few  attempts  at  ad- 
verse legislation  were  made  in  the  Legislatures  of  such  States  as 
held  annual  sessions  of  their  Assemblies,  an  effort  was  made  in 
Massachusetts  to  revive  the  agitation  of  the  previous  year.  The 
age  limit  under  the  new  bill  was  only  five  years,  but,  according 
to  the  Boston  Herald  of  March  3,  1896,  "  It  required  just  about 
ten  minutes  this  morning  for  the  Insurance  Committee  to  hear  all 
who  appeared  to  offer  objections  or  make  suggestions  on  the  bill 
offered  to  prohibit  insurance  on  the  lives  of  children  under  five 
years  of  age. 

For  the  remonstrants,  ex-Governor  Long  stated  that  he 
did  not  care  to  say  anything  upon  the  bill,  as  it  was  apparent 


230  HISTORY   OF   THE   PRUDENTIAL. 

that  the  petitioners  had  practically  abandoned  the  idea  of  passing 
it."  Among  others,  the  State  Insurance  Commissioner  pointed 
out  the  absurdity  of  the  bill  as  drawn,  stating  that  it  would  be 
necessary  to  have  the  same  reconstructed  if  it  were  to  be  further 
considered.  Another  bill  relative  to  the  business  of  Industrial 
insurance  was  introduced  in  the  Massachusetts  Legislature 
requiring  the  companies  to  furnish  a  large  amount  of  statistical 
data,  the  compilation  of  which  would  not  only  have  been  very 
burdensome  to  the  Company,  but  exceedingly  expensive,  while 
the  conclusions  to  be  drawn  from  such  data  would  in  a  general 
way  have  been  of  little  value.  The  existing  requirements 
of  the  State  as  regards  necessary  statistical  information  are 
sufficiently  strict  to  place  before  the  public  all  the  information 
which  can  reasonably  be  demanded  of  such  companies,  and  this 
view  prevailed  with  the  Legislature,  and  the  attempt  of  the 
opposition  therefore  proved  a  failure. 

Although  the  year  was  a  Presidential  year  and  considerably 
disturbed  on  account  of  the  political  agitation,  the  Company  con- 
tinued to  make  considerable  progress  in  both  departments  of  its 
business.  As  one  of  the  electoral  candidates,  Mr.  Dryden  re- 
ceived a  majority  vote  as  Presidential  elector  for  the  State  of 
New  Jersey. 

The  intimate  relation  of  Industrial  insurance  to  life  insur- 
ance on  the  Ordinary  plan  was  ably  set  forth  by  Mr.  Dryden  in 
an  address  at  the  annual  meeting  of  the  Life  Insurance  Associa- 
tion of  New  York  : — 

These  companies  reach,  both  in  their  industrial  and  ordinary  depart- 
ments, a  class  of  people  not  reached  by  the  other  companies.  The  ordinary 
work  is  a  natural  evolution  of  the  industrial  work.  Men  see  the  value  of 
life  insurance  by  reason  of  the  educational  power  of  an  industrial  policy,  and 
the  next  step  is  an  ordinary  policy.  Life  insurance  is  of  the  most  value 
when  most  widely  distributed,  and  no  other  companies  compare  with  the 
industrial  in  extent  of  distribution.  Every  time  a  worthy  man  is  induced 
to  take  a  life-insurance  policy  the  body  politic  is  helped.  These  companies 
are  cultivating  broadly  and  soundly  among  the  masses  the  idea  of  life-insur- 
ance protection,  which  will  bear  fruit  for  both  industrial  and  ordinary 
companies.  Industrial  agents  may  fairly  be  termed  a  sort  of  salvation  army 
in  life-insurance  work.  To  the  hitherto  neglected  masses  is  being  carried 
the  gospel  of  self-help,  protection  and  a  higher  life.  It  is,  we  think,  a  fair 
statement  to  say  that  the  industrial  companies  are  doing  more  to  spread  a 
knowledge  of  and  desire  for  life  insurance  among  those  who  have  the  greatest 
need  of  it  than  all  the  other  companies  combined. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l894~'96.      231 

A  similar  reference  to  the  extension  of  Ordinary  insurance 
by  The  Prudential  and  other  Industrial  companies  was  made  in 
the  Spectator  of  January  9,  1896,  as  follows  : — 

The  day  is  probably  far  distant  when  the  income  from  the  ordinary 
branches  of  the  industrial  companies  will  equal  that  from  the  industrial 
business,  but  there  is  every  reason  to  think  that  they  will  increase  the  volume 
of  the  ordinary  business  each  year.  In  fact,  this  is  bound  to  be  the  case  if 
the  argument  held  out  by  these  companies  that  industrial  insurance  is  an 
educator  is  correct.  They  have  maintained,  and  rightly  so,  that  the  circum- 
stances of  their  industrial  policy-holders  become  better  from  year  to  year, 
and  as  they  rise  in  the  social  scale  they  need  the  protection  of  life  insurance 
in  greater  amount  than  when  first  insured.  Agents  soon  learn  where  they 
can  place  ordinary  policies  and  push  this  class  of  insurance  to  the  fore. 
The  industrial  worker  of  to-day  must  be  able  to  hold  his  own  in  competition 
with  others,  whether  it  be  for  industrial  or  ordinary  insurance  he  is  canvass- 
ing, if  he  is  to  make  a  success  at  his  calling. 

Mention  has  been  made  of  the  close  and  satisfactory  rela- 
tions existing  between  the  executive  officers  of  The  Prudential 
and  the  large  body  of  agents  and  district  managers  scattered  all 
over  the  land.  As  stated  in  the  Indicator  under  date  of  March, 
1896,  "Considering  the  drawbacks  of  the  year,  the  results  at- 
tained are  complimentary  alike  to  the  management  and  the 
workers  in  the  field.  *  *  *  *  The  officers  have  often 
boasted  that  no  insurance  company  in  the  world  has  in  its 
service  a  field  staff  superior  to  The  Prudential  in  sterling  worth, 
all-around  ability  to  produce  great  results  and  loyal  attachment 
to  the  Company."  These  remarks  have  special  application  to 
two  men  who  almost  from  the  beginning  had  been  connected 
with  the  Company's  progress,  had  done  much  to  increase  the 
Company's  business  operations,  and  at  a  critical  hour,  when  ex- 
treme competition  did  much  to  disturb  the  relations  of  agents 
and  officers,  remained  loyal  and  faithful  to  the  Company,  who 
looked  upon  its  employees  as  its  friends,  offering  the  friendship 
of  the  executive  officers  and  the  Company  to  every  worthy 
worker  in  whatsoever  capacity.  Mr.  John  F.  Collins  had 
entered  the  service  of  The  Prudential  in  1879,  when  he  had 
already  achieved  success  and  distinction  in  the  general  life- 
insurance  business,  having  held  prominent  positions  in  the 
executive  departments  of  other  well-known  old-line  companies. 
Mr.  Collins  died  on  the  29th  of  March,  1896,  and  by  his  death 
the  Company  sustained  a  loss  which  it  is  difficult  to  express  in 


232  HISTORY   OF   THE   PRUDENTIAL. 

words.  While  it  would  be  impossible  to  do  Mr.  Collins  justice 
in  a  simple  tribute  to  his  memory,  it  is  but  proper  that  brief 
notice  should  be  taken  of  one  who  in  a  large  measure  was  instru- 
mental in  the  making  of  The  Prudential  Insurance  Company  of 
America.  I  quote  the  following  brief  extract  from  a  biographical 
sketch  of  Mr.  Collins,  published  in  The  Prudential  Weekly 
Record  of  April  6,  1896  : — 

His  coming  to  The  Prudential  Insurance  Company  of  America  was,  of 
course,  his  first  introduction  to  the  Industrial  business,  but  his  ripe  knowl- 
edge, tact,  intuition,  adaptability  and  exceptional  talent  for  quickly  and 
rightly  judging  men  and  things,  conjoined  to  make  him  in  this  new  and,  at 
that  time  in  this  country,  novel  field  of  labor,  the  right  man  in  the  right 
place.  To  him  was  confided  the  opening  of  Philadelphia.  So  well  did  he 
perform  this  task  that  in  nine  months  it  was  deemed  safe  to  entrust  the  busi- 
ness there  to  other  hands.  That  was  in  1880.  Mr.  Collins  was  chosen  to  fill 
the  important  position  in  New  York  made  vacant  by  the  resignation  of 
Superintendent  Thornton.  There  Mr.  Collins  remained  until  his  demise, 
ten  days  ago,  and  it  is  but  simple  justice  to  his  memory  to  say  that  to  no 
individual  worker  of  its  entire  Field  Staff,  during  all  those  sixteen  years  of 
remarkable  achievement,  is  The  Prudential  more  indebted  for  its  wonderful 
progress  and  prosperity  than  to  the  greatly  lamented  subject  of  this  brief 
sketch — John  Fletcher  Collins.  It  was  not  alone  as  an  efficient,  painstaking 
and  eminently  successful  Superintendent  that  Mr.  Collins  served  The  Pru- 
dential. In  the  earlier  years  of  his  connection  with  it  the  Company  fre- 
quently availed  itself  of  his  wide  acquaintance  and  varied  experience,  and 
called  upon  him  to  perform  valuable  services  in  affairs  entirely  foreign  to  his 
district  duties.  From  first  to  last  he  was  a  true,  brave  and  gallant  defender 
of  its  faith  and  principles. 

Within  a  few  months  after  the  death  of  Mr.  Collins  the 
Company  sustained  another  serious  loss  in  the  death  of  Superin- 
tendent Frederick  Bichbauer.  Mr.  Kichbauer  had  also  been 
connected  with  the  Company  for  many  years,  having  entered  the 
office  in  1880  as  an  agent  under  Superintendent  Fessenden  in 
Brooklyn,  which  office  had  then  been  opened  but  a  short  time. 
What  has  been  said  of  Superintendent  Collins  was  equally  true  of 
Superintendent  Kichbauer,  who  at  all  times  and  under  all  circum- 
stances had  proved  himself  a  most  worthy  employee  deserving  of 
the  complete  confidence  of  the  Company,  and  equal  to  every  task 
entrusted  to  his  care.  I  quote  a  few  remarks  with  reference  to 
Mr.  Eichbauer's  life  and  work  from  The  Prudential  Weekly 
Record  of  June  15,  1896  : — 

Such  was  the  talent,  diligence  and  energy  displayed  by  Agent  Eichbauer 
that  two  years  later  he  was  appointed  Assistant  Superintendent.  Here 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l894~'96.      233 

again  he  displayed  such  ability  and  such  fidelity  to  the  interests  of  the  Com- 
pany that  when,  in  October,  1885,  Superintendent  Fessenden  died,  Mr.  Eich- 
bauer  was  chosen  to  succeed  him.  How  well  Superintendent  Eichbauer 
managed  Brooklyn  District,  No.  I,  during  the  next  nine  years — the  conspic- 
uous ability  he  displayed  as  a  leader  of  men  and  a  producer  of  results — his 
zeal  to  carry  out  the  wishes  of  the  Company  and  to  promote  its  cause — the 
many  brilliant  victories  he  achieved  along  the  whole  Prudential  line,  Ordi- 
nary as  well  as  Industrial,  these  and  other  things  alike  creditable  to  the 
deceased  are  too  well  known  in  Prudential  circles  to  need  recital. 

On  January  i,  1894,  Mr.  Eichbauer  was  appointed  to  take  charge  of 
Chicago  District,  No.  i.  His  brief  career  in  the  great  metropolis  of  the  West 
is,  like  his  Brooklyn  career,  familiar  to  all.  It  is  to  be  said  of  this  member 
of  the  Prudential  Old  Guard,  that  he  was  noted  as  a  man  who  could  win 
and  hold  the  esteem  and  confidence  of  his  subordinates,  who  was  affable 
and  courteous  to  all,  and  who  was  loyal  to  the  Company  and  his  friends. 
He  will  live  in  the  annals  of  Industrial  I/ife  Insurance  in  America  as  one 
who  did  a  great  work  in  its  cause — as  one  of  those  who,  in  the  service  of 
this,  the  Pioneer  Industrial  Company  of  America,  ably  helped  to  open 
new  territory  when  it  was  decided  to  extend  operations  beyond  New  Jersey 
and  make  the  system  national  in  scope.  The  success  achieved  by  Mr. 
Eichbauer  in  those  days  when  Industrial  Insurance  was  new  and  by  many 
regarded  as  of  doubtful  permanency,  cannot  but  help  inspire  those  who  are 
in  the  business  to  strive  hard  for  the  greater  victories  offered  now  to  the 
pushing  and  the  energetic. 

In  Superintendents  Collins  and  Eichbauer  The  Prudential  lost 
men  whose  place  can  not  be  filled  in  the  hearts  of  those  who  were 
familiar  with  their  noble  traits,  and  who  had  evidence  of  their 
exceptional  ability  as  life  underwriters  in  the  Industrial  field. 
It  is  something  considerably  to  the  credit  of  The  Prudential  that 
it  should  have  attracted  to  its  field  force  men  of  as  high  a  type 
as  Collins  and  Eichbauer,  in  every  respect  worthy  to  be  honored 
with  the  highest  positions  in  the  field  operations  of  Industrial 
insurance  and  the  extension  of  the  principles  of  life  insurance  to 
the  masses. 

After  twenty  years  it  could  now  be  said  of  The  Prudential 
and  Industrial  insurance  that  the  work  which  Mr.  Dryden  set  out 
to  do  in  1875  had  been  accomplished,  and  it  may  not  be  out  of 
place  to  give  a  brief  extract  from  an  article,  on  the  Company's 
twenty-year  record,  from  the  Insurance  Critic,  as  quoted  in  The 
Prudential  Weekly  Record  of  November  9,  1896  : — 

Industrial  life  insurance  as  thus  organized,  and  as  applied  by  The  Pru- 
dential and  other  companies,  is  of  inestimable  value  as  a  provision  for  the 
careful  and  provident  workingman,  opening  to  him  a  door  of  opportunity 


234  HISTORY   OF  THE   PRUDENTIAL. 

which  he  may  enter  for  the  purpose  of  making  his  small  savings  available 
to  secure  a  larger  sum  for  the  time  of  need.  It  is  a  plan  appealing  directly 
to  the  thoughtful  and  considerate.  A  keen  sense  of  personal  responsibility 
and  of  family  duties  gives  to  life  insurance  a  ready  access  to  mind  and  heart. 
To  the  reflecting  and  well-disposed  toiler,  life  insurance  is  a  treasure  and 
joy.  Of  great  value  is  it  also  as  an  educator  for  the  development  of  thrift 
and  forethought  among  the  laboring  population  in  our  great  cities  and  other 
centres  of  industry.  Its  agents  have  been  engaged  in  very  important 
branches  of  mental  and  moral  training,  are  still  doing  this  work  on  an 
increasingly  extensive  scale,  and  in  years  to  come  they  will  carry  forward 
the  instruction  and  discipline  in  continuance  of  the  earlier  work  of  the 
school.  Industrial  life  insurance  is  in  every  way  a  fountain  of  good  influ- 
ence to  the  great  army  of  mechanics,  artisans  and  other  industrial  workers. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l897~'98.      235 


CHAPTER  XIV. 

THE   PRUDENTIAL   INSURANCE  COMPANY   OF   AMERICA, 
1897-1898. 

The  year  1897  marks  a  new  era  in  Industrial  insurance. 
Under  date  of  January  ist  Mr.  Dryden  addressed  a  circular  letter 
to  the  field  force,  in  which  the  Company's  agents  were  informed 
that  thereafter  Industrial  policy-holders  would  be  placed  on  prac- 
tically the  same  basis  as  Ordinary  policy-holders,  and  that  in  the 
future  Industrial  policies  would  contain  a  provision  for  additional 
benefits,  for  cash  dividends  and  for  cash-surrender  values.  I  can 
not  do  better  than  quote  the  larger  part  of  Mr.  Dryden' s  letter  : — 

When  Industrial  insurance  was  introduced  in  the  United  States,  twenty- 
one  years  ago,  by  The  Prudential,  the  Company  did  not  have  at  its  command 
a  vast  array  of  statistics  upon  which  to  base  premium  rates,  nor  were  there 
any  long-established  precedents  upon  which  the  Company  could  base  definite 
plans  as  to  the  future,  as  was  the  case  in  Ordinary  insurance.  It  is  true 
that  Industrial  insurance  had  been  practiced  in  England  for  a  number  of 
years,  but  even  in  1876  the  business  in  that  country  was  still  in  an  experi- 
mental state,  and  the  volume  of  business  transacted  was  small  compared 
with  the  immense  proportions  it  has  since  assumed. 

The  Prudential  practically  entered  a  new  and  untried  field,  certainly  a 
new  field  in  so  far  as  the  United  States  was  concerned.  In  the  twenty-one 
years  during  which  it  has  been  making  a  specialty  of  Industrial  insurance,  The 
Prudential  has  gained  a  vast  experience  and  has  built  up  voluminous  records  of 
the  many  details  that  enter  into  its  business.  From  time  to  time,  as  the  Com- 
pany has  gained  in  experience,  it  has  found  that  various  changes  could  be  made 
with  advantage  and  that  various  concessions  could  be  granted  to  policy-holders. 
We  can  not  take  the  space  to  refer  to  these  concessions  here.  They  are  a 
matter  of  history,  and  as  much  a  part  of  the  Company's  record  as  the  figures 
which  go  to  show  its  many  successes.  It  may  be  of  interest  and  of  value  to 
the  field  force,  however,  to  state  that  the  total  cost  to  the  Company  to  date 
of  the  various  concessions  that  have  been  made  from  time  to  time  to  policy- 
holders  has  been  nearly  $700,000,  and  hundreds  of  thousands  of  dollars  will 
be  paid  in  the  future  on  account  of  these  concessions.  Each  new  move  on 
the  part  of  the  Company,  however,  has  marked  a  step  from  the  experi- 
mental conditions  which  surrounded  Industrial  insurance  twenty-one  years 
ago  to  the  certitude  and  exactness  that  marks  the  business  to-day.  Any 


236  HISTORY   OF  THE   PRUDENTIAL. 

step  which  the  Company  now  takes  is  not  an  experiment,  but  is  based  upon 
practical  and  scientific  knowledge  of  the  business;  and  the  effect  in  the 
present  and  in  the  future  of  any  concession  can  be  measured  almost  to  a 
certainty. 

In  keeping  with  the  wonderful  growth  of  the  business  has  been  the 
increase  in  knowledge  on  the  part  of  the  general  public  as  to  the  benefits 
which  are  being  conferred  by  Industrial  insurance.  At  the  outset  the  busi- 
ness was  hampered  by  opposition  of  all  kinds.  One  by  one  the  obstacles 
raised  by  ignorance  and  prejudice  have  been  overcome  until,  at  the  present 
time,  the  beneficent  influences  of  the  system  are  found  to  exert  an  uplifting 
tendency  in  every  branch  of  life.  Decreased  death  rates,  increased  savings, 
more  prudence  in  the  home,  better  care  in  case  of  sickness  and  many  other 
benefits  that  go  to  make  better  and  happier  conditions  of  life,  can  be  traced 
to  Industrial  insurance.  This  is  not  a  statement  based  upon  inference. 
Facts  gleaned  from  health  reports,  savings-bank  statistics  and  other  sources 
emphatically  prove  the  assertion. 

These  remarks  on  the  growth  of  the  business,  the  extent  of  its  influence 
and  the  change  from  experiment  to  certainty,  are  all  preliminary  to  an 
announcement  of  new  features  in  Industrial  insurance,  which  the  Directors 
and  Officers  of  The  Prudential  wish  to  announce  to  you  by  means  of  this 
letter.  Before  entering  upon  the  details  of  this  new  move,  we  wish  to  say 
that,  notwithstanding  the  liberality  and  far-reaching  effect  of  the  concessions 
we  have  made  in  the  past,  the  benefits  we  now  propose  to  grant  exceed  in 
liberality  and  generosity  all  the  other  concessions  that  have  ever  been  made 
in  Industrial  insurance.  The  concessions  of  the  past  have  cost  hundreds  of 
thousands  of  dollars  ;  these  new  concessions  will,  in  the  course  of  time,  cost 
the  Company  millions  of  dollars,  or,  in  other  words,  put  millions  of  dollars 
into  the  pockets  of  our  policy-holders  and  their  beneficiaries.  In  fact,  the 
new  features  which  The  Prudential  now  introduces  into  the  business  mark 

A  NEW  ERA  IN  INDUSTRIAL  INSURANCE. 

The  new  features  consist  of  various  far-reaching  concessions  to  policy- 
holders,  and  will  be  found  in 

A  NEW  POLICY  CONTRACT. 

This  policy,  for  simplicity  and  liberality  to  the  insured,  has  never  been 
approached  by  any  Industrial  insurance  company  abroad,  and  certainly  not 
by  any  in  this  country. 

Let  us  examine  the  new  policy.  Casually  glancing  at  it,  we  see  in  bold 
characters  the  words  "After  Five  Years,"  "After  Fifteen  Years,"  and  other 
attractive  captions.  Let  us  see  what  each  of  these  means.  Under  the 
heading 

"AFTER  FIVE  YEARS— ADDITIONAL  BENEFITS/' 

•we  find  that  after  the  policy  has  been  in  force  for  five  years  the  Company 
will  pay,  in  case  of  the  death  of  the  insured  after  five  years  and  within 
fifteen  years,  an  Additional  Benefit  or  Bonus,  in  addition  to  the  sum  insured 


INCORPORATED 


Whole  Iiife  Policy. 

IN  .CONSIDERATION,  of  the  weekly  premium  hereinafter  stated,  which,  it  is  agreed,  shall  be  paid  to  the  Company  or 
to  its  authorized  representative  on  or  before  every  Monday  during  the  continuance  of  this  Contract,  THE  PRUDENTIAL 
INSURANCE  COMPANY  OF  AMERICA  AGREES  TO  PAY,  at  its  Home  Office  in  the  City  of  Newark,  New  Jersey, 
unto  the  executors,  administrators  or  assigns  cf  the  person  named  as  the  Insured  in  this  Policy,  unless  settlement  ihall  be  made 
under  the  provisions  of  article  second  on*the  back  hereof,  the  amount  of  Benefit  provided  in  the  Schedule  herein  contained  and 
any  additions  thereto,  within  twenty -four  hours  after  acceptance  at  its  said  office  of  satisfactory  proof  of  the  death  of  the  Insured 
during  the  continuance  of  this  Policy,  which  is  issued  and  accepted  subject  to  the  conditions  and  agreement*  printed  or  'ihe  back 
hereof,  which  are  herebv  referred  to  and  made  part  of  this  Contract, 

IF  THIS  POLICY  IS  CONTINUED  IN  FORCE, 

it  will  become  entitled  to  Additional  Benefits,  Cash  Dividends  and  Cash  Surrender  Values,  as  follows: 

AFTER   FIVE  YEARS— Additional  Benefits, 

If  the  Insured  shall  die  after  FIVE  YEARS  from  the  date  hereof,  the  Company  will  pay,  in  addition  to  the  Benefit  provided  in 
said  Schedule,  an  amount  to  be  determined  from  the  tables  of  Additional  Benefits  issued  by  the  Company  for  the  year  in  which 

AFTER    FIFTEEN   YEARS— Cash  Dividends, 

At  the  end  of  FIFTEEN  YEARS  from  the  date  hereof  and  at  the  end  of  EACH  FIFTH  YEAR  THEREAFTER,  this  Policy 
will  be  credited  with  a  Dividend  from  the  surplus  apportioned  by  the  Company  to  policies  of  the  same  age  and  kind,  payable  in 
Cash  to  the  Insured,  unless  payment  shall  be  made  under  the  provisions  of  article  second  on  the  back  hereof, 

AFTER   TWENTY   YEARS— Cash  Surrender  Values, 

At  the  end  of  TWENTY  YEARS  from  the  date  hereof  or  at  the  end  of  ANY  FIFTH  YEAR  THEREAFTER,  the  Company 
will  pay  to  the  Insured  as  a  Cash  Surrender  Value  for  this  Policy  the  amount  fixed  by  the  table  printed  on  the  back  hereof, 
provided  this  Policy  is  legally  surrendered  to  the  Company  within  three  months  after  the  end  of  said  twenty  years  or  of  any  fifth 

OH,  IF  THIS  POLICY  IS  LHPSED  HFTER  THREE  YEHRS-Paidxup  Policy, 

If  this  Policy  shall  become  forfeited  for  the  non-payment  of  any  premium  after  having  been  in  force  three  full  years,  and  the 
Insured  shall  be  over  thirteen  years  of  age  at  date  of  such  forfeiture,  the  Company  will  grant  a  nonsparticipating  PaioVup  Life 
Policy  in  accordance  with  Chapter  356  of  the  Laws  of  1895  of  the  Stafe  of  New  Jersey, 


AGE  NEXT 

BIRTHDAY  AT 
DATE  OF  POLICY 


BENEFIT,  if  Insured  it  not  less  than      j 
ten  years  of  age  next  birthday, 

If  the  Insured  shall  die  within  six  calendar  months  from  the  date  hereof,  the  Com- 
pany  will  pay  only  one-fourth  of  this  sum.  If  the  Insured  shall  die  after  six  months  and 
within  onto  year  from  the  date  hereof,  the  Company  will  pay  only  one-half  of  this  Bum. 
After  one  year  from  its  date  the  Policy  will  be  in  force  for  the  full  amount 


TABLE    OF    INFANTILE    BENEFITS 


Double  the  above  amounts  will  be  paid,  for  a  weekly  premium 
10  Cents. 
SPECIAL    NO 
OVER  ONE 


In  Witness  Whereof,  the   President  and  Vice   President  of  said  Company  ha> 
its  Home  Office  in  the  City  of   Newark,   New  Jersey,  this 


signed  this   Policy 


Vice  President. 


INDUSTRIAL   POLICY   FORM    AT   PRESENT   IN   USE   BY 
THE)    PRUDENTIAL,    INSURANCE    COMPANY    OF    AMERICA. 


Conditions  and  Agreements. 


and  ill 


6th.    PAYMENT  or  PREMIUM*.— All  premiums  are  payable  at  the  Home  Office  of  tbe 
-The  Company  may  make  any  payment  provided  for  In        Company,  but  may  be  paid  to  an  authorized  representative  of  the  Company  ;  but  payments 

'  'fffSSsS^SIS^SS^SSSi    ^SfSSf&m  SSSSfSX "SfflSZSKtESZ ttiSSSKlS! 

,         ,  .  ,  ,  burial  or  for       n-hen  due.  by  an  authorized  representative  of  the  i  .,3duiyofthe 

^sSSSSSSL'a&s&'&s  ?^^^^s^^^^^^:^^h^^,^or^^ 


other  person  appearing  t 

baring  Incurred  expense  in  any  way  c 

>ny  other  purpose,  and  tbe  production  by 

ofiaidpersonsorofotbersumclentproof.  .    . 

conclusive  evidence  that  such  Benefits  have  be. -n  paM  ' 

ihereto.  and  that  all  claims  under  this  Policy  have  been  fully  satisfied 


.— Tbe  Insured  may 


r  a  period  not  exceeding  four  weeks,  the  Company  will  pay 
,  subject  to  the  conditions  of  tbe  Policy. 


the  State  of  New  Jersey 


8S2T 


any  other  company! 


I  premiums  on  such  insurances  shall  exceed  ten  cents  | 

CASH    SURRENDER   VALUES 
of  Twenty  Years  and    of   each   Fifth   Year  thereafter  If  Policy  Is 


ontlnued   In  force 


The  amounu  In  the  following  table  are  bused  on  a  weekly  premium  of  6  cents.  If  tbe  weekly  premium  on  Ih 
proportionately  Increased.  For  example,  if  this  Policy  Is  subject  to  a  premium  of  10  cents  per  week,  the  Cash  Surren 
U  l!i  cents  per  week,  tbe  Cash  Surrender  Value  wllMie  three  times  the  amount  in  this  table,  and  so  on. 


Surrender  Valu«  i 


li 

End  of 

End  of 

E°r 

Endo, 

li 

End  of 

End  of 

IJ 

End  of 

End  Of 

s- 

l 

Years 

•!i:S 

17.00 

a 

N  i»i 

i? 

M  N 

stiso 

s? 

§: 

11 

5 

37 

i^ 

11 

1!:S 

M 

I 

j 

!?:So 

H 

27 
30 

w.w 

i! 

u! 

n'.a 

1 

4')  '-) 

li 

.00 

j  50 

23 

a 

n 
:n 

M 

i 

s? 

1 

15.50 

S.S 

16.50 

!?-S 

la'oo 

II 

19.50 

.50 

S3 

41.00 

n 

IS.  SI 

- 

Jj 

• 

40.00 

1* 

22 

5:5 

n 

a 

Hi 

?-s 

K-S! 

i! 

1 

IS 

50 
'50 

S 

42  00 

1 

1 

sssss 

n  iC 

li>  i» 

11 

20'. 

S:S 

5| 

26 
25 

2! 
C 

i* 

s? 

1.00 

0:00 

12.50 
12.00 

El 

::::::: 

18 

1     50 

20:00 

33 

lolso 

23.00 

H  H 

34.00 
34  00 

xiso 

.1 

•" 

is'oo 

5 

s-s 

00 

?'no 



JO 

M 

THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l897~'98.      237 

by  the  policy.  The  circular  enclosed  herewith  gives  the  amount  of  these 
Additional  Benefits  for  the  year  1897  in  the  case  of  policies  on  which  five 
years'  premiums  have  already  been  paid.  You  will  observe  that  the  Addi- 
tional Benefit  on  policies  issued  in  1892  is  $1.40  for  each  $100  of  insurance, 
and  that  the  sum  increases  steadily  with  each  additional  year  the  policy  is 
in  force  until,  on  policies  which  have  been  twenty-one  years  in  force,  the 
Additional  Benefit  reaches  the  sum  of  $5  per  $100  of  insurance.  These 
amounts  appear  liberal  when  applied  to  individual  policies,  but  the  full  effect 
and  great  expense  involved  in  this  concession  can  only  be  judged  when  we 
say  that  the  Additional  Benefits  for  1897  are  applied  to  a  total  of  over 
$130,000,000  of  insurance.  You  will  observe  that  the  Additional  Benefits 
cease  at  the  time  the  first  Cash  Dividend  is  paid,  as  the  distribution  of  profits 
which  will  be  made  at  that  time  may  prevent  the  Company  from  declaring 
Additional  Benefits  thereafter.  Under  the  second  heading, 

"AFTER  FIFTEEN  YEARS— CASH  DIVIDENDS," 

we  find  an  agreement  to  pay  to  the  insured  a  Cash  Dividend  on  the  policy 
after  fifteen  years'  premiums  have  been  paid  and  at  the  end  of  each  fifth 
year  thereafter.  In  other  words,  each  policy  hereafter  issued  will  participate 
in  profits  on  the  Accumulative  Dividend  Plan,  the  first  dividend  being 
declared  at  the  end  of  fifteen  years,  and  the  subsequent  dividends  at  the  end 
of  each  fifth  year  during  the  further  continuance  of  the  policy. 

We  next  find  a  paragraph  headed 

'•AFTER  TWENTY  YEARS— CASH  SURRENDER  VALUES.'* 

Here  we  find  an  agreement  to  pay,  at  the  end  of  the  twentieth  and  each 
fifth  year  thereafter,  a  definite  cash  value  upon  surrender  of  the  policy.  If 
you  will  examine  the  figures  shown  by  the  table  on  the  back  of  the  policy 
you  will  find  that  the  values  promised  are  much  the  same  as  those  given 
under  an  Ordinary  contract,  thus  proving  the  liberal  tendency  of  The 
Prudential  in  adopting  this  feature  in  its  new  policy. 

We  next  find  a  paragraph  headed 

"PAID-UP  POLICIES— AFTER  THREE  YEARS." 

This  condition  provides  for  a  Paid-up  Policy  according  to  the  present  tables, 
but  we  have  omitted  the  tables  from  the  back  of  the  policy  so  that  the  new 
contract  may  not  be  obscured  by  too  much  type.  The  amounts  of  the  Paid- 
ups,  the  period  of  the  Expectation  of  Life,  will  be  precisely  as  contained  in 
present  tables.  You  will  notice,  however,  one  important  change,  and  that 
is  that  Paid-ups  will  be  given  under  the  new  contract  after  the  insured 
attains  the  age  of  13  instead  of  age  15  as  heretofore. 

RETROACTION. 

The  foregoing  concessions  are  so  far-reaching  and  so  entirely  new  in 
Industrial  insurance  that  it  becomes  a  serious  problem  as  to  whether  they  can 
be  applied  to  existing  policies ;  and  me  problem  is  complicated  when  the 


238  HISTORY   OF   THE   PRUDENTIAL. 

immense  amount  of  insurance  in  force  at  the  present  time — over  three  hun- 
dred millions  of  dollars — is  considered.  A  concession  on  this  vast  sum  of 
insurance  of  even  $i  per  $100  of  insurance  would  be  a  master  of  three 
millions  of  dollars.  Under  the  new  concessions  we  are  brought  face  to  face 
with  much  larger  amounts.  The  application  of  the  benefits  given  in  the 
new  policies  to  existing  contracts  must  therefore,  of  necessity,  become  a 
matter  of  experiment  and  of  experience,  as  the  Company's  entire  business 
has  been  in  the  past.  But,  we  will  say  that  if  experience  proves  that  it  is  safe, 
the  new  concessions  will  be  made  applicable  to  old  contracts  as  fast  as  the 
conditions  will  justify  us. 

During  the  year  1897  Cash  Dividends  will  be  paid  on  policies  issued  in 
1877  and  1882,  and  Additional  Benefits  will  be  paid  on  all  policies  on  which 
five  years'  premiums  have  been  paid.  The  amount  of  the  payment  in  indi- 
vidual cases  under  these  two  benefits  will  be  found  in  the  circular  herewith. 

The  table  of  cash  dividends  on  policies  issued  in  1877  is  made  up  of  the 
amount  declared  for  that  year,  plus  the  dividend  of  1882.  This  is  in  keeping 
with  the  principle  of  the  new  policy,  of  paying  the  first  dividend  at  the  end 
of  fifteen  years,  with  an  additional  dividend  at  the  end  of  each  fifth  year 
thereafter. 

You  will  observe  that  Additional  Benefits,  but  for  a  reduced  amount,  will 
be  paid  on  policies  issued  in  1877  and  in  1882,  even  after  the  Cash  Dividend 
has  been  paid. 

We  hope  to  receive  certain  benefits  in  return  for  the  important  conces- 
sions which  are  herein  announced.  First  of  all  we  expect  that  the  new 
policy  will 

ENCOURAGE  AGENTS  TO  REMAIN 

in  the  employ  of  the  Company.  The  Agents  can  now  offer  inducements 
never  before  heard  of  in  Industrial  insurance.  They  can  uphold  these  in- 
ducements by  practical  results.  It  will  thus  be  easier  to  secure  new  appli- 
cations and  to  induce  policy-holders  to  keep  up  their  policies.  Besides  all 
the  advantages  coming  from  connection  with  the  Industrial  Branch,  you 
will  have  the  clear-cut,  liberal  policies  of  the  Ordinary  Branch  to  sell, 
backed  up  by  the  growth  and  actual  results  of  that  Branch  in  the  past  eleven 
years.  No  corps  of  Agents  in  this  broad  country — in  fact,  in  the  world — 
will  have  better  or  more  liberal  contracts  to  sell  than  the  Agents  of  The 
Prudential  Insurance  Company.  They  will  be  in  a  position  to  insure  the 
poor  or  the  rich,  giving  each  the  best  insurance  that  can  possibly  be  ob- 
tained. Under  such  conditions  as  these,  and  with  such  opportunities,  we 
believe  our  Agents  will  be  very  slow  to  leave  our  employ.  We  hope  also  to 
secure 

A  LOWER  LAPSE  RATE. 

Our  new  policy  is  so  designed  that  it  becomes  more  valuable  to  the 
insured  with  each  successive  payment. 

We  have  dealt  with  our  policy-holders  with  a  degree  of  liberality  which 
has  never  before  been  known  in  life  insurance.  *  *  *  *  It  remains  with 
our  policy-holders  to  show  their  appreciation  by  keeping  up  their  policies 


INCORPORATED  AS  A  STOCK  COMPANY   BY  THE  STATE  OF  NEW  JERSEY* 


PAID-UP   LIFE   POLICY. 

In  Consideration  of  the  Application  for  this  Policy,  and  of  the  surrender  of  the  former 

Policy,  No ,  on  the  life  of - , 

herein  designated  as  THE  INSURED,  The  Prudential  Insurance  Company  of  America  hereby 
promises  to  pay,  at  its  Home  Office  in  the  City  of  Newark,  New  Jersey,  unto  the  executors, 
a,,        administrators  or  assigns  of  the  Insured,  unless  settlement  shall  be  made  under  the  provisions 
o«oi«»i>,    of  article  second  hereinafter  contained,  the  sum  of 

- - Dollars. 

within  twenty-four  hours  after  acceptance  at  its  said  office  of  satisfactory  proof  of  the  death, 
of  the  Insured. 

This  Policy  is  issued  and  accepted  subject  to  the  following  conditions  and  agreements: 


FIRST  —In  case  the  age  shall  have  been  misstated  in  the  original 
Policy  for  which  this  Policy  is  issued  in  exchange,  the  amount  insured 
_  by  this  Policy  shall  be  corrected  to  the  amount  that  would  have  been 
granted  if  th~  age  of  the  Insured  had  been  accurately  stated. 

8«COND.— The  Company  may  pay  the  sum  of  money  insured  hereby, 
to  any  relative  by  blood  or  connection  by  marriage  of  the  Insured,  or 
to  any  other  person  appearing  to  said  Company  to  be  equitably  entitled 
to  the  same  by  reason  of  having  incurred  expense  in  any  way  on  behalf 
of  the  Insured  for  his  or  her  burial,  or  for  any  other  purpose,  and  the 
production  by  the  Company  of  a  receipt  signed  by  any  or  either  of  said 
persons,  or  of  other  sufficient  proof  of  such  payment  to  any  or  either  of 
them  shall  be  conclusive  evidence  that  such  sum  has  been  paid  to  the 
person  or  persons  entitled  thereto,  and  that  all  claims  under  this  Policy 
have  been  fully  satisfied. 


THIRD.— The  Insured  may  serve  in  the  Militia  or  in  the  Army  or 
Navy  of  the  United  States,  in  time  of  peace  or  for  the  purpose  of  pre- 
serving order  in  case  of  riot ;  but  in  time  of  war,  a  written  permit  for 
such  service  must  be  obtained  from  the  Company  and  an  extra  premium 
paid.  In  case  of  the  death  of  the  Insured  from  service  in  war  without 
such  permit,  the  liability  of  the  Company  shall  be  limited  to  the  net 
reserve  on  this  Policy  computed  according  to  the  legal  standard  of  the 
State  of  New  Jersey. 

FOURTH.— No  suit  on  this  Policy  shall  be 
Co 


tainable  against  the 
Company  unless  brought  within  six  months  after  the  date  of  death  of 


FlFTH.-If  full  proof  of  death  is  given  to  the  Company  within  thre* 
months  next  after  the  death  of  the  insured,  and  if  tt)e  foregoing  con- 
dition as  to  occupation  shall  have  been  complied  with,  this  Poficy  shall 
be  incontestable,  except  that  the  sum  insured  may.be  adjusted  for  mi% 
statement  of  age. 


In  Witness  Whereof,  the  President  and  Vice  President  of 

said  Company  nave  signed  these  presents  at  its   Home  Office  in  the  City  of  Newark,  New 
Jersey,  this day  of 189 


c/ 


INDUSTRiAU-Puo-ur  Un.      ton,  of  7-» 


PAID-UP    POLICY    FORM    AT    PRESENT   IN    USE    BY 
THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l897-'98.      239 

and  continuing  their  confidence  in  the  Company.  If  these  expectations  are 
realized,  we  shall  consider  that  we  have  received  our  reward  for  the  conces- 
sions herein  set  forth. 


It  is  hardly  possible  to  exaggerate  the  far-reaching  value  of 
these  additional  voluntary  concessions  made  by  The  Prudential 
Insurance  Company,  and  it  was  well  stated  in  The  Prudential 
Weekly  Record  of  January  4,  1897,  that  "  From  its  inception  The 
Prudential  has  never  neglected  the  lesson  taught  by  its  own  experi- 
ence. And  so  to-day  the  Company  issues  this  new  contract  and 
makes  these  additional  concessions  to  its  old  policy-holders  because 
the  experience  gained  in  the  past  twenty-one  years  shows  that 
such  improvements  are  practical  and  safe."  And  it  could  be 
said  with  perfect  truth  that,  ' '  for  simplicity  and  liberality  to  the 
insured,  the  new  Industrial  policy  has  never  been  approached  by 
any  Industrial  insurance  company  in  this  country  or  abroad." 
With  equal  justice  the  Company  could  speak  of  this  step  in  advance 
as  ' (  co-operation  ' '  in  the  true  sense  of  the  word,  and  of  Industrial 
policies  as  '  *  profit-sharing  contracts, ' '  practically  identical  with 
policies  issued  by  Ordinary  life  companies,  placing  the  man 
paying  a  five-cent  premium  on  the  same  level,  as  regards  benefits 
and  liberal  surrender  provisions,  as  one  paying  a  premium  of 
$5,000  annually.  For  five  cents  a  week  a  Prudential  Industrial 
policy  provides  at  present  not  only  for  the  contingencies  of  the 
future,  but  also  offers  a  legitimate  reward  for  the  present,  because 
by  its  terms  an  equitable  distribution  of  the  profits  accruing  from 
this  small  investment  is  made  in  the  numerous  ways  referred  to 
in  Mr.  Dryden's  letter.  The  financial  aspect  of  so  far-reaching  a 
step  in  advance  may  fairly  be  appreciated  when  it  is  stated  that 
the  cost  of  the  voluntary  concessions  made  by  The  Prudential 
Insurance  Company  to  its  Industrial  policy-holders  to  January  i , 
1897,  was  approximately  $700,000,  representing,  however,  but  a 
small  fraction  of  future  obligations  incurred  voluntarily  by  the 
Company. 

Among  numerous  improvements  made  in  the  agency  admin- 
istration of  the  business,  one  of  considerable  importance  deserves 
to  be  mentioned.  Under  date  of  January  2,  1897,  the  Vice- 
President  of  the  Company  informed  the  field  force  that — "  For 
some  time  past  we  have  experimented  with  medical  inspections, 
and,  finding  the  plan  successful,  it  has  been  determined  to  extend 


240  HISTORY  OF  THE   PRUDENTIAL. 

the  system. ' '  The  method  of  medical  inspection  was  briefly  out- 
lined in  a  circular  letter  of  the  Medical  Director  to  the  Company's 
Medical  Examiners,  from  which  I  make  the  following  extracts  : — 

A  medical  inspection  is  satisfactory  when  the  following  conditions  are 
fulfilled  :— 

1.  You  should  personally  see  the  applicant. 

2.  You  should  give  as  near  as  you  can  his  [or  her]   correct  age  next 
birthday,  regardless  of  any  statement  made  on  the  application. 

3.  You  should  state  to  the  best  of  your  judgment  his  [or  her]  present 
condition  of  health. 

4.  You  should  ascertain  if  he  or  she  has  signed  the  application  and  paid 
the  premium. 

Remember  that,  whenever  you  are  requested  to  make  an  examination, 
an  inspection  will  not  answer.  There  is  a  decided  difference  between  an 
inspection  and  an  examination.  In  an  inspection,  judgment  is  given  from 
the  appearance  of  the  individual  as  well  as  from  answers  to  inquiries  that 
may  be  made.  In  an  examination  the  party  is  not  only  asked  certain  ques- 
tions, but  the  Examiner  is  expected  to  ascertain  by  percussion  and  auscul- 
tation the  condition  of  the  heart,  lungs  and  abdominal  viscera. 

Under  this  practice  all  adult  applicants  are  now  either  med- 
ically inspected  or  examined,  and  the  former  opportunities  for 
adverse  selection  have,  therefore,  been  correspondingly  dimin- 
ished. 

Among  other  changes  and  improvements  in  the  practice 
of  the  Company,  a  new  form  of  application  was  issued  this  year, 
which  is  reproduced  on  the  opposite  page.  The  only  material 
alteration  in  the  application  was  in  reference  to  the  signature 
of  the  parent  or  guardian  of  the  person  to  be  insured,  if  applicant 
was  under  the  age  of  fifteen  next  birthday.  The  application 
reproduced  is  the  one  at  present  in  use  by  the  Company. 

A  new  ' '  Manual  of  Instructions ' '  was  issued  to  the  field 
force,  the  essentials  of  which  are  summarized  in  the  following 
brief  rules  for  agents,  illustrating  the  systematic  and  thorough 
manner  in  which  the  field  operations  of  the  Company  are  con- 
ducted : — 

1.  Collect  promptly  and   systematically  during   the  first   part  of  each 
week.     Collect  at  least  one  week's  premium  at  the  time  of  writing  an  appli- 
cation. 

2.  Write  up  your  account  and  transmit  your  cash  on  time. 

3.  Report  for  lapsing  all  policies  four  weeks  in  arrears. 

4.  Canvass  persistently  and  methodically. 


Form   1 . 

AGENT....... 


...  POLICY  NO, 


Ass't 

Sup't _ District 

FOB  OFKICK  USB. 

APPLICATION 


FOR  INSURANCE  IN 


FOB  OFFICE  USB. 


Approved  by 

I 


The    Prudential    Insurance   Company   of   Arnerica. 


HOME  OFFICE,  NEWARK',  N.  J 

ut  Questions  to  be  answered  by  the  person  whose  life  is  proposed  for  insurance  if  age  is  15  years  NEXT  birthday  or 
° over,  but,  if  younger,  by  the  Parent  or  Guardian. 


FULL  NAME  OF  PERSON  TO  BK  INSURED! 


MED.  EX.  CALL 


At o'clock,  A.  M.,  P.M..  on 


Right  or  Left. 


3.       DATB  OF  BIRTH  ! 
Month.  Day. 


4.     AOK   NEXT   BIKTHDAYI 


5.  AMOUNT  OF  INSURANCE) 


6.   MEEKLY  PREMIUM1? 


7.    PLACE  OF  BIRTH  t  8.  RACE  I  9.  SEX  I 

(State  or  Country.)  (White  or  Colored.) 


|O.  MARRIED  OR  SINGLE  I     1 1.  OCCUPATION! 

(If  Adult.)  (Omit  for  lives  less  than  13  years.) 


I  12.  Is  life  proposed  now  in- 
sured in  this  Company » 

P  •»  I  f  so,  state  nu  m  bers  and 
amounts  of  Policies. 


Is  life  proposed  no\v 
insured  in  any  other 
Com  pany '  I  f  so,  for 
what  amount! 


P  13.  Has  life  proposed  ever  been 
<  rejected  or  postponed  by 
£2  this  or  any  other  Company  ! 


If  so,  by  what  Company ! 


^  14.  A.  What  is  the  present  con- 
O 


When  last  sick ! 


Of  what  Disease  f 


D.   Does  any  physical  or 


dition  of  health  ! 

Month. 

1 

Year. 

defect  or  infirmity  exist  ! 

15. 

Height  and  Weight  ! 

16.  Has  either  Parent  or  any 
Brother  or  Sister  died  of 
Consumption  t 

17 

Does  Rupture  exist  ! 

18.    Is  spirituous 
used! 

liquor 

If  so,  is  a  proper 
truss  worn  ! 

Is  opium  or  any 
narcotic  used  1 

19.  Has  life,  proposed  ever  suffered  from  Consumption, 
Asthma,  Spitting  of  Blood,  Habitual  CoURh,  Apoplexy, 
Paralysis,  Heart  Disease,  Insanity,  Fits  or  Convulsions, 
Rheumatism,  Disease  of  the  Liver  or  Kidneys,  Cancer, 
Ulcers  or  Accident  of  any  kind! 


State  what  disease. 


I  HEREBY  APPLY  for  insurance  for  the  amount  herein  named,  and  I  declare  and  warrant  that  th 
'tten  opposite  the  respective  questions  by  me.  or  strictly  in  accordance  with  my  directions.    I 
contract  of  insurance  between  me  and  The  Prudential  Insurance  Company  of  A       ' 
of  this  application,  shall^  be  accepted  subiect  to  the  conditions  and  agreements 

:   Signature  of  Applicant, 

'  old  NEXT birtkda 
1<ntnger,byth,t  Parent 


i.  I  agree  that  said  answers,  with  this  declaration, 
,  and  that  the  policy  which  may  be  granted  by  th< 
In  such  policy.  I  further  agree  that  no  obligation 


ppcan,    \ 

he  ptrton   vhote  I 
red  if  /f  year,  L  . 
y,  or  over,  but  if  ( 
ent  or  Guard™.  ) 


APPLICANT'S  MARK  NOT  ACCEPTE 


—  1=5 

ftont,  iflifeprofx 
\t  friar,  ilTTl 


.     Dated  this.. 


AGENTS  CERTIFICATE. 

This  certificate  mast  In  all  cases  b»  signed  by  the  Agent  himself  after  ths  above  questions  are  all  answered,  and  he  has  become 
i  tint-class  risk,  and  also  by  the  Assistant  Superintendent  If  application  was  secured  by  one. 


satisfied  that  the  life  proposed" 


A.    Is  the  Applicant  a 
relative  of  yours  ? 


State  relationship. 


What  amount  of  Premiums 

have  you  collected  In  advance  ? _ cts. 


I  CERTIFY  that  I  have  this... 


.day  of. — 


..199     ,  personally  seen  and  questioned 


*  If  a  policy  is  already  in  force!  

attached  to  the  application,  which  should  be  marked  in  the  left  hand  margin  "ADDITIONAL."   If  application  is  for  increased  or  decreased  Insurance,  and  Uw 
existing  policy  is  to  be  lapsed,,*  lapse  schedule  containing  particular,  of  the  policy  as  well  as  the  policy  Itself  most  be  attached  to  the  application. 


INDUSTRIAL    APPLICATION    FORM   AT    PRESENT    IN    USE    BY 

THE   PRUDENTIAL   INSURANCE    COMPANY    OF    AMERICA. 


Examiner's  l^epoirt. 

To  be  filled  In  by  a  regularly  appointed  Medical  Examiner,  when  the  amount  applied  for  is  $260  or  more. 


OBSERVE  FOUR  IM- 
.  PORTANT  POINTS: 


1.  A  PERSONAL  EXAMINATION. 

2.  THE  AGE  NEXT  BIRTHDAY. 


3.  THE  CONDITION  OF  HEALTR. 

4.  APPLICANT'S  SIGNATURE   BELOW. 


Is  question  19,  on  the  other    2.    Does  the  date  of  birth  given     3.    What  do  you  believe  to  be     4.   HaceT  (White  or  Colored.) 
side,  answered  correctly  J  to  you  agree  with  that  given  the  age  next  birthday  I 

to  Agent ! 


5.    Height  and  Weight! 
(If  over  15  years  of  age.) 


Z  ft. .In Ibs. 


6.    Does  the  applicant  appear 
to  be  iu  good  health  I 


7.    Is  there  any  physical  defect 


8.  Has  the  applicant  ever  been 
rejected  by  this  or  any 
other  Company  f 


<    9.    Has  cither  parent,  or    a 
j-1  brother  or  sister  died  of 

Consumption ! 


1O.  Have  you  reason  .to  suspect 
intemperate  habit*,  or,  1C 
female,  immoral  life  1 


II,  Has  applicant  within  the  past  five  years  bad  any  serious 
Illness  or  injury:  Spitting  Blood,  Habitual  Cough,"  etc.l  If 
yes,  give  date  and  particulars  below. 


12.    Is  the  Heart  diseased  t 


3.     Are  the  Lungs  diseased  t 


14.    Do  you  detect  disease  of  any  kind  f 


|5.    Have  you    personally 
the  applicant  I 


16.    When! 

Day         Month  Year 


i  the  life,  in  your  opinion,  a  nrst-class,  fair  average, 
r  poor  risk  f 


:  REMARKS:  Use  this  space  for  full  particulars,  if  required. 


°  Signa 


lure  of  party  examined,  or, 
if  too  young  to  write,  of  person    • 
pplying  for  Child's  Insurance. 


I  CERTIFY,  that  the  above  answers  are  true 
i  that  the  person  examined  signed  in  my  presence. 


Jf.  D. 


JVIEDICAL.    EXHIWINBR'S   INSPECTION   REPORT. 

To  be  filled  In  by  a  regularly  appointed  Medical  Examiner,  when  the  amount  applied  for  is  less  than  $250. 


"OBSERVE  FOUR  IM- 
PORTANT POINTS- 


1..  A  PERSONAL  INSPECTION-. 
2.    THE  AGE  NEXT  BIRTHDAY. 


3.  THE  APPARENT  HEALTH. 

4.  THE  APPLICANT'S  SIGNATURE. 


A.      WHAT     DO    YOU     BELIEVE     TO     BE    THE   ACTUAL  AOE 
NEXT    BIRTHDAY  f 


B.      18  THERE  ANY  REASON  TO  8U8PECT  INTEMPERATE  HABITS, 
OR,  IF  FEMALE,  IMMORAL  UFE  I 


<  C.    RACEI  (WHITE  OR  COLORED.  ] 


D-      HAS  APPLICANT  EVER  BEEN  REJECTED  I 


E.       DlO    APPLICANT    SIGN     THI»    APPLICATION 
ON  OTHER  SIOEt 


F.      DlD^YOO  PERSONALLY  SEE   APPLIC* 


Q      WHEN  r 

Pay  Month  Year 


< .    DOES  APPLICANT  APPEAR  TO  BE  IN  I 


DOES  APPLICANT  INTEND  TO  CONTINUE  THIS  INSURAhCET 


|-  Sionature    of    party    i 
<     specttA.  or,  if  a,  ehi'ld.  Of 
£     parent  or  guardian. 


JJj         /  CERTIFY,  that  the  above  answers  are  correct 
m  and  that  applicant  signed  in  my  presence. 


Jf.  D. 


THE  PRUDENTIAL  INS.  CCX  OF  AMERICA,   iqj-q.      241 

5.  Correctly  represent  the  insurance  you  offer,  and  write  applications 
only  on  lives  you  believe  to  be  in  good  health  and  of  temperate  habits.* 

6.  See  all  applicants  personally,  and  be  careful  to  get  correct  age  next 
birthday. 

7.  Permit  no  application  to  leave  your  hands  until  it  has  been  signed 
by  the  applicant  in  your  presence  and  until  it  is  complete  in  every  detail. 
If  previous  insurance  exists,  attach  first  policy  to  application  and  forward  for 
endorsement. 

8.  Hand  in  your  applications  as  early  in  the  week  as  possible. 

9.  Do  not  deliver  a  policy  unless  you  are  certain  the  insured  is  in  good 
health  at  the  date  of  delivery. 

10.  Read  your  "Instruction  Book";  consult  your  "Assistant";  study 
the  forms  you  must  use ;  learn  the  requirements  of  your  office  and  your 
duties  as  a  correspondent. 

A  further  change  in  the  agency  administration  was  touched 
upon  in  a  letter  of  the  President  to  the  field  force  dated  January  29, 
1897,  in  which  the  agents  were  informed  that ' '  in  view  of  the  very 
gratifying  reduction  in  defalcations  during  the  year  1 896  we  have 
been  enabled  to  make  better  arrangements  with  the  American 
Surety  Company  for  bonding  our  agents.  It,  therefore,  affords 
us  pleasure  to  announce  that  during  the  present  bond  year — 
February  i,  1897,  to  February  i,  1898 — we  shall  only  require  $i 
for  an  agent's  bond,  instead  of  $2  as  heretofore,  and  no  charge 
will  be  made  to  agents  who  are  members  of  the  Old  Guard. ' ' 
This  concession  to  agents  is  proof  of  the  increasing  efficiency  of 
the  field  force,  and  the  high  character  of  the  men  employed, 
and  it  may  be  added  that  in  another  year  the  Company  saw  its 
way  clear  to  do  away  with  bonds  and  sureties  entirely,  resting 
its  guarantee  of  honest  and  efficient  management  on  the  part  of 
its  agents  on  the  fact  of  previous  good  character  and  the  sub- 
stantial inducements  for  men  to  remain  honest  in  a  business 
pursuit  assuring  to  the  agent  a  satisfactory  income  during 


*  Regarding  this  point  the  Agents'  Instruction  Book  reads  as  follows  : — 
"All  persons  applying  for  insurance  must  be  seen  personally,  and 
questioned  as  to  their  age,  health,  habits,  etc.,  in  order  that  the  Agent  may 
be  able  to  judge  for  himself  whether  they  are  desirable  risks  or  not.  The 
performance  of  this  duty  by  others  does  not  release  him  from  the  responsi- 
bility of  personally  certifying  to  the  truth  of  the  statements  made  in  the 
Agent's  Certificate,  which  must  in  every  case  bear  his  signature. 

"Under  no  circumstances  are  you  to  canvass  or  submit  Applications 
from  persons  of  immoral  habits  or  inmates  of  houses  of  ill  fame." 


242  HISTORY   OF   THE   PRUDENTIAL. 

the  proper  performance  of  his  duties.  The  position  of  the 
Industrial  agent  had  also  been  materially  improved  through 
changes  introduced  by  the  Company  in  the  management  of  its 
Ordinary  business,  by  doing  away  with  the  separate  management 
of  the  Ordinary  department,  and  making  out  of  its  Industrial 
agents  Ordinary  insurance  producers.  In  communicating  this 
change  to  the  field  force  under  date  of  February  10,  1897,  the 
President  wrote  as  follows  : — 

It  is  now  and  always  has  been  one  of  the  aims  of  The  Prudential  to  make 
the  stay  of  every  Agent  in  the  force  a  permanent  one.  The  Company  is 
averse  to  losing  the  services  of  good  representatives,  and  has  from  time  to 
time  instituted  such  changes  in  its  business  policy  and  in  the  terms  of 
remuneration  to  Agents  as  tended  to  insure  their  retention.  We  have  been 
successful  in  a  large  degree  with  hese  measures,  but  the  Company's  idea  is 
to  make  continuous  advance  in  the  matter  and  we  now  propose  taking  a 
step  far  in  advance  of  anything  yet  done. 

We  shall  make  a  contract  with  each  Agent  covering  not  only  the  Indus- 
trial but  Ordinary  business  as  well,  so  that  an  Agent  devoting  himself  to  both 
departments  of  the  work  will  gain  a  double  advantage  from  his  labors. 

The  commission  on  Ordinary  business  during  the  first  year,  and  the 
renewal  interest  afterward,  will  make  gratifying  additions  to  the  income 
secured  from  the  Industrial  business.  This  action  of  The  Prudential  places 
each  member  of  the  Agency  staff  on  practically  the  same  level  of  position 
as  the  General  Agents  of  other  companies,  but  with  greater  opportunities  for 
writing  and  holding  business.  Under  the  plans  of  the  Company  you  are 
able  to  offer  profit-sharing  policies  of  life  insurance  for  the  whole  of  the 
family — men,  women  and  children. 

The  new  Industrial  contract  is  so  much  like  an  Ordinary  one  as  to  enable 
you  to  appeal  to  people  who  have  hitherto  held  aloof  from  Industrial  Insur- 
ance, and  in  canvassing  for  the  one  the  opportunity  for  presenting  the  merits 
of  the  other  is  bound  to  come. 

Having  once  determined  to  make  radical  changes  in  the 
policy  conditions  of  its  Industrial  business,  the  Company  still 
further  liberalized  the  Industrial  contract  by  granting  a  revival 
privilege  to  lapsed  policy-holders,  under  which  policies  could  be 
reinstated  without  the  payment  of  arrears,  such  unpaid  premi- 
ums being  made  a  non-interest-bearing  lien  upon  the  policy,  pay- 
able only  in  case  of  the  death  of  the  insured.  The  subject  is 
fully  set  forth  in  the  President's  letter  to  the  field  force  dated 
January  30,  1897: — 

We  have  decided  to  make  yet  another  concession,  to  go  into  effect  for 
the  week  of  February  8th,  to  policy-holders  who  have  been  unable  to  con- 
tinue the  payment  of  premiums.  We  believe  that  there  are  instances  where 


THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 

HOME  OFFICE,  NEWARK,  N.  J. 


AGENCY  APPLICATION  AND  AGREEMENT. 

REPORT  0F  SaPERINrENDENT. 


Applicant's  full  name _ _._ _ 

To  operate  at. „ „ „ 

I.    Did  you  personally  interview  the  applicant  ? _ 2.     Did  applicant  respond  to  an  advertise- 
ment, come  to  the  office  unsolicited,  or  was  he  introduced  by  an  Agent  or  Assistant? 

3.  What  is  his  general  appearance? , _ _ _ 

4.  Does  he  reside  at  the  address  given  in  Agency  Application? _ _ 

5.  Is  residence  in  respectable  neighborhood?     (To  be  ascertained  by  personal  visit) 

__ _ _ 6.    Is  applicant  married  or  single  ? _.._ 

7.  Is  applicant  a  resident  of  a  boarding-house,  does  he  rent  rooms  or  house,  or  does  he  own  his  own 
home? 

8.  From  your  personal  visit  to  last  employer  what  recommendation  does  he  make  ?    (Not  to  be  answered 
•where  applicant  was  employed  by  any  other  Industrial  insurance  company) _ _ __ 


9.     Did  you  personally  visit  the  other  references,  and  what  recommendations  do  they  make  ?.... 


10.  Has  Agent  been  provided  with  Manuals  of  Instruction  ?. _ 

11.  Does  he  propose  devoting  his  whole  time  to  the  business? If  not,  state  what  other  occu- 
pation he  intends  following 

Assigned  to  Ass't  Sup''t _ _ 

Sup't. 

PERSONAL  STATEMENT  BY  THE  APPLICANT. 

RECORD    OK    EMPLOYMENT    FXDR    PAST    FIVE    YEARS  : 


NAME  OF  EMPLOYER 

DATE  OF  SERVICE 

ADDRESS 

KIND  OF  BUSINESS 

(ner  EMPLOYER) 

FROM                                        TO 

FROM                                        TO 

FROM                                        TO 

FROM                                        TO 

REFERENCES: 


NAME 

ADDRESS 

OCCUPATION 

Were  you  mi  employe!  Dy  ibis  Company? __ 

state  wnen  ? 

mere _ 

Hat  capacity 

Wly  flid  you  leave  our  employ...... 


....  If  so, 


Were  you  ever  employe!  oy  any  otter  Industrial  Co.?._ If 

so.  state  what  Company. 

Waen 


Wnat  capacity _ 

Wny  did  yon  leave  its  employ 


Dated  this 


.:. Agent. 

dayof.._ _ /po 


INDUSTRIAL   AGENT'S   AGREEMENT   AT   PRESENT   IN  USE    BY 
THE    PRUDENTIAL    INSURANCE    COMPANY    OF    AMERICA. 


AGENT'S  AGREEMENT, 


In  consideration  of  my  appointment  as  an   AGENT  of  THE  PRUDENTIAL  INSURANCE  COMPANY  OF 
AMERICA,  I  do  hereby  agree  as  follows  : 

THE  FOLLOWING  CLAUSES  RELATE  ONLY    TO   BUSINESS  KNOWN  AS  INDUSTRIAL  INSURANCE.  BEING  THAT 
ON  WHICH  THE  PREMIUMS  ARE  PAYABLE  WEEKLY. 

1.  To  canvass  for  insurance  and  to  collect  premiums  regularly  every  week.    To  ke.ep  true  accounts  as 
to  the  business  in  such  books  as  may  be  provided  by  the  Company,  and  to  make,  on  the  day  required  and 
on.  the  forms  provided  by  the  Company,  each  week  a  true  account  of  all  moneys  received  by  me,  and  to 
remit  at  the  same  time  all  moneys  whatever  received  by  me. 

2.  To  fill  in  and  return  to  the  Home  Office  each  week  on  a  Lapse  Schedule  provided  by  the  Company, 
a  list  of  all  the  policies  upon  which  four  weeks'  premiums  are  due. 


3.  That  on  Monday  of  each  week  I  am  to  be  debited  with  the  amount  of  the  weekly  premiums  shown 
the  Life  Policy  Register,  less  the  total  amount  of  the  weekly  premiums  on  policies  entered  in  the 
>sed  Policy  Register  for  that  week  ;  and  it  is  agreed  th^t  the  Company  is  not  bound  to  prove  that  I  have 


4.  That  in  case  of  my  resigning  the  Agency,  or  of  my  being  dismissed  therefrom,  I  agree  to  introduce 
to  my  successor  in  the  Agency  all  the  policy-holders  in  my  Agency  after  such  resignation  or  dismissal, 
upon  being  requested  so  to  do  by  the  Company. 

5.  That  "  Official  Transfer,"  as  used  herein,  means  the  transfer  on  the  Company's  books  at  the  Home 
Office  of  policies  to  or  from  my  Agency  during  and  after  my  term  of  service  with  the  Company. 

6.  That  in  case  any  policy  or  -policies  in  my  Agency  become  lapsible  under  the  Company's  rules, 
through  default  in  payment  of  premiums,  and  I  fail  to  report  such  policy  or  policies  to  the  Company  for 
lapse  at  the  time  specified  in  said  rules,  the  arrears  in  excess  of  the  amount  regularly  allowed  by  the  Com- 
pany are  to  be  charged  to  my  account. 

7.  That  I  am  to  receive  a  salary  amounting  to  15  per  cent,  of  the  amount  of  my  collections  each  week, 
said  salary  to  be  known  as  "  Ordinary  Salary." 

8.  That  in  addition  to  the  amount  specified  in  clause  7  a  "Special  Salary"  is  to  be  paid  to  me, 
amounting  to  fifteen  times  the  net  increase  of  my  collectible  weekly  debit.     But  should  a  decrease  in  the 
amount  of  my  weekly  debit  occur,  a  charge  of  fifteen  times  the  amount  of  such  decrease  is  to  be  made 
against  my  account,  "which  charge  can  be  offset  by  the  production  of  further  net  increase  in  debit  or  by 
payment  of  fifteen  times  the  amount  of  the  decrease  in  cash. 

g,.  To  furnish  to  the  Company,  if  required,  a  bond,  in  form  and  substance  as  prescribed  by  the  Com- 
pany, to  secure  the  faithful  performance  of  duty  on  my  part  as  Agent  and  with  such  surety  as  shall  be 
approved  by  the  Company. 

10.  It  is  expressly  agreed  that  I  am  not  to  be  entitled  to  any  Ordinary  or  Special  Salary  until  all  the 
conditions  and  agreements  contained  in  this  contract  have  been  fully  complied  with  by  me. 

11.  That  the  amount  of  the  collectible  weekly  debit  is  arrived  at  by  deducting  the  TOTAL  amount  of  the 
weekly  premiums  on  all  policies  entered  in  the  Lapsed  Policy  Register  from  the  TOTAL  amount  of  the 
weekly  premiums  on  all  policies  entered  in  the  Life  Policy  Register. 

12.  Should  business  of  any  description  be  transferred  to  me,  no  Special  Salary  is  to  be  paid  on  the  in- 
crease  in  my  collectible  weekly  debit  resulting  from  such  transfer,  but  only  on  the  amount  of  net  increase 
shown  after  deducting  the  amount  transferred,  and  such  transferred  business,  if  subsequently  lapsed,  will 
not  affect  my  Special  Salary  if  reported  by  me  for  lapse  at  such  time  as  to  admit  of  the  official  lapsing  for  a 
date  within  the  period  prescribed  by  the  Company's  rules. 

13.  Should  business  of  any  description  be  transferred  from  my  Agency,  the  decrease  in  my  collectible 
weekly  debit  resulting  from  such  transfer  is  not  to  be  charged  against  my  Special  Salary,  provided  the 
business  becomes  chargeable,  under  this  agreement,  to  the  Agent  to  whom  it  is  transferred.     It  is,  however, 
expressly  agreed  that  all  policies  officially  transferred  from  my  Agency,  either  during  my  term  of  service 
with  the  Company  or  after  the  termination  of  my  employment  by  resignation,  dismissal  or  otherwise,  and 
reported  for  lapse  at  such  time  as  to  admit  of  the  official  lapsing  without  charge,  under  the  Company's  rules, 


against  any  Agent  who  has  received  the  transfer  of  the  policies,  shall  be  charged  against  my  account  at  the 
regular  Special  Salary  rate  of  fifteen  times  the  amount  lapsed. 

14.  That  if  any  business  is  transferred  froia  my  Agency,  and  it  is  again  transferred  before  the  Agent  who 
received  it  from  me  has  held  it  long  enough  to  become  chargeable  with  it  under  this  agreement,  I  am  to  be 
held  responsible  in  case  of  its  lapse,  unless  some  one  of  the  Agents  who  received  it  in  transfer  has  retained 
the  business  long  enqugh  to  become  chargeable  with  it  under  this  agreement. 

15.  That  I  am  to  be  allowed  to  draw  Special  Salary  only  to  the  amount  the  character  of  the  new  busi- 
ness, after  investigation,  will  in  the  opinion  of  the  Company  warrant. 

16.  That  if  my  weekly  collectible  debit  should  decrease  in  any  week,  and  I  should  subsequently  claim 
salary  on  any  future  increase  of  business,  it  will  only  be  payable  upon  the  net  increase  from  the  last  date 
the  Special  Salary  was  allowed. 

17.  That  should  the  arrears  on  my  account  be  deemed  excessive  by  the  Company  or  my  collections  below 
the  percentage  of  the  debit  prescribed  by  the  Company's  rules  the  Special  Salary  may  be  withheld  until 
the  rules  are  complied  with. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  1897-' 98.      243 

the  parties  formerly  insured  would  like  to  have  the  original  policies  rein- 
stated or  revived,  but  lack  the  necessary  funds  to  pay  up  the  arrears. 

Until  further  notice,  the  following  concession  will  apply  in  such  cases : 
In  the  event  of  the  insured  under  policies  on  which  52  or  more  contin- 
uous premiums  were  paid,  prior  to  lapse,  desiring  to  revive  the  policies, 
the  Company  will,  if  the  applicants  are  unable  to  pay  the  whole  arrears, 
accept  a  policy  lien  (which  will  not  call  for  payment  of  interest)  for  the 
whole  of  arrears,  if  necessary,  or  for  such  part  as  they  are  unable  to  pay  at 
the  time  of  applying  for  revival.  This  concession  applies  only  to  policies 
/j  or  more  weeks  in  arrears  at  time  of  application  for  revival.  These 
policy  liens  may  be  cancelled  during  life-time  by  the  insured,  through  pay- 
ment of  the  sum  due  the  Company.  They  will  form  liens  upon  the  policies, 
and  the  amounts  represented  shall  be  deducted  from  any  payment  becoming 
due  under  the  policies.  They  will  also  form  liens  upon  the  legal  reserve  to 
the  credit  of  the  policies  and  may  be  deducted  therefrom,  before  considering 
any  paid-up  insurance  to  which  the  insured  might  otherwise  be  entitled,  in 
the  event  of  the  policies  revived  being  subsequently  lapsed.  You  can  ap- 
preciate that  this  concession  means  a  great  deal  to  those  interested,  and  we 
believe  it  will  be  warmly,  welcomed  by  many  of  those  who  were  obliged  to 
discontinue  their  insurance  in  The  Prudential. 


The  form  used  in  case  of  policy  liens  on  lapsed  contracts  is 
reproduced  as  follows  : — 

INDUSTRIAL  POLICY  LIEN. 
Policy  No 189 

The  undersigned  has  applied  to  The  Prudential  Insurance  Company  of 
America  for  a  revival  of  Policy  No. ,  on  the  life  of 

,  issued  by  said  Company,  and 

acknowledges   that  the    arrears  of   premiums  on   said    policy  amount  to 

dollars   and cents,   and 

agrees  that  in  event  of  the  revival  by  said  Company  of  the  said  policy,  the 
said  amount  will  be  a  lien  on  said  policy  and  will  be  deducted  therefrom 
if  said  policy  becomes  a  claim. 

Should  a  paid-up  policy  be  issued  in  lieu  of  the  above  mentioned  policy, 
the  said  amount  of  arrears  of  premiums  will  be  deducted  from  the  legal 
reserve  to  the  credit  of  said  paid-up  policy,  or  any  dividend  additions  or  con- 
cessions that  may  hereafter  accrue  on  said  policy  may  be  applied,  at  the 
option  of  the  Company,  to  cancel  or  reduce  the  amount  of  this  lien. 

It   will  readily  be   granted   that   the  Company,   in  taking 
these    important   steps,   had   practically  extended  to   Industrial 


244  HISTORY   OF   THE   PRUDENTIAL. 

policy-holders  the  loan  privileges  of  Ordinary  policy-holders, 
subject  to  certain  modifications  on  account  of  elements  inherent 
in  the  practice  of  Industrial  insurance. 

Every  possible  effort  had  been  made  by  the  Company  to 
encourage  lapsed  policy-holders  to  revive  their  policies  or  to 
assist  those  in  arrears  to  keep  their  policies  in  force.  Special 
instructions  had  been  issued  to  agents  from  time  to  time,  insist- 
ing upon  special  efforts  to  keep  policies  in  force  in  cases  where 
policy-holders  had  fallen  in  arrears,  and  from  an  article  on  the 
subject  in  The  Prudential  Weekly  Record  of  August  9,  1897,  I 
make  a  few  extracts  to  illustrate  the  anxiety  of  the  Company 
with  reference  to  policy-holders  in  distress  : — 


A  number  of  complaints  have  been  made  of  late  to  us  by  policy-holders 
as  to  the  arbitrary  methods  adopted  by  the  Agents  and  Assistant  Superin- 
tendents in  reference  to  collection  of  premiums  in  arrears. 

The  Prudential  has  builded  its  business  upon  good  business  principles, 
and  one  of  these  is  the  insistence  that  courtesy  be  shown  to  all  connected 
with  it.  The  Company  recognized  from  the  beginning  of  its  career  that 
occasion  would  arise  when  the  policy-holders  might  not,  for  sufficient  rea- 
sons, be  able  to  meet  the  payment  of  premiums  regularly,  and  provision 
for  such  contingency  was  made. 

When  policy-holders  fall  in  arrears,  point  out  the  danger  to  them  and 
try  to  have  the  premiums  paid  up.  Do  not,  however,  display  harshness. 
Accept  premiums  within  the  limit. 

\Ve  do  not  complain  if  old  polic}- -holders  are  a  little  behind.  They  will 
catch  up  when  they  can,  and  if  properly  treated  will  clear  up  the  indebted- 
ness at  the  earliest  opportunity. 

Educate  the  policy-holders  in  the  matter  of  paying  premiums — start 
right  with  them  ;  use  tact,  good  judgment,  courtesy — and  there  will  be  no 
complaints. 


To  further  encourage  lapsed  policy-holders  to  revive  their 
policies,  a  new  rule  was  introduced,  under  date  of  February  19, 
1897,  under  which  the  Company  assumed  the  expense  of  medical 
re-examination  in  all  cases  of  revivals.  Previous  to  this  it  had 
been  the  rule  to  have  the  insured  pay  the  cost  of  the  second 
medical  examination,  and  occasionally  cases  had  occurred  where 
the  expense  had  been  a  bar  towards  reinstatement,  and,  rather 
than  place  even  so  slight  a  hindrance  in  the  way  of  policy  re- 
vivals, the  Company  assumed  the  entire  expense  of  such  medical 
re-examinations. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  igj-g.      245 

An  Intermediate  policy  was  issued  for  the  first  time  in 
1897  in  place  of  the  former  Special  Adult  policy,  which  had  been 
discontinued  under  date  of  January  ist,  in  view  of  the  fact  that 
the  new  concessions  to  Industrial  policy-holders  were  of  more 
value  than  the  slight  reduction  in  rates  which  had  been  the  feat- 
ure of  the  Special  Adult  table.  In  communicating  to  the  field 
force  the  views  of  the  Company  on  this  additional  innovation, 
the  President  stated  that — 

It  is  our  purpose  to  issue  Intermediate  Policies  in  our  Ordinary  Branch. 
These  policies  have  been  prepared  to  meet  a  demand  which  exists  for  plans 
of  insurance  adapted  to  the  requirements  of  people  who,  by  reason  of 
physical  excellency,  personal  and  family  history,  financial  condition,  occu- 
pation, habits  and  environment,  feel  that  they  should  be  insured  on  terms 
somewhat  more  favorable  than  those  of  the  regular  Industrial  policies.  We 
expect,  therefore,  that  our  representatives  will  carefully  select  the  risks  they 
place  before  us  for  these  Intermediate  Policies,  and  aim  to  get  only  those  who 
are  more  nearly  up  to  the  Ordinary  rather  than  the  Industrial  standard. 

We  wish  it  clearly  understood  that  these  policies  are  not  intended  for 
purely  Industrial  risks.  We  will  not  accept  applications  for  Intermediate 
Policies  on  persons  engaged  in  the  manufacture  or  sale  of  intoxicants,*  or 
from  those  employed  in  an  establishment  where  explosives  are  manufactured. 

The  premiums  on  these  policies  will  be  payable  quarterly,  semi-annually 
and  annually,  and  will  be  the  same  for  both  men  and  women. 


*  This  class  of  risks  is  accepted  in  the  Industrial  department,  subject 
to  certain  restrictions,  as  stated  in  the  following  extract  from  the  Agents' 
Instruction  Book  : — 

Saloon-keepers,  bar-tenders  and  persons  engaged  in  the  sale  of  intox- 
icants will  not  be  insured  for  more  than  $250  or  thereabouts,  and  in  all  cases 
the  age  will  be  rated  up  five  years.  The  Company  does  not  wish  any  par- 
ticular effort  made  to  get  business  of  this  class,  but  if  applicants  are  taken, 
five  years  must  be  added  to  the  actual  age,  and  the  amount  of  benefit  for 
the  higher  age  must  be  quoted.  The  highest  premium  accepted  from  per- 
sons engaged  in  this  occupation  at  the  various  ages  is  shown  below  : — 


ACTUAL  AGE. 

LIMIT  OF 
WEEKLY  PREMIUM. 

20  to  26  inclu 
27  to  34 
35  to  39 
40  to  44 
45  to  47 
48  to  59 
60  to  65 

give           

15  cents. 
20  cents. 
25  cents. 
30  cents. 
35  cents. 
40  cents. 
35  cents. 

246 


HISTORY   OF  THE   PRUDENTIAL. 


An  abbreviated  copy  of    the    Intermediate    table   is   given 
below  : — 

PREMIUM  RATES  FOR  A  POLICY  OF  $500. 
WHOI/E;  LIFE. 


AGE  NEAREST  BIRTHDAY. 

ANNUAL 
PREMIUM. 

SEMI-ANNUAL 
PREMIUM. 

QUARTERLY 
PREMIUM. 

20 

$10  97 

$5  70 

$2    9I 

25 

12  55 

653 

3  33 

30 

14    22 

7  39 

3  77 

35 

16  42 

8  54 

4  35 

40 

19   02 

9  89 

5  04 

45 

22   52 

ii  71 

5  97 

50 

27    28 

14  19 

7  23 

55 

33  77 

17  56 

8  95 

It  will  be  observed,  on  examination  of  the  extract  from  the 
President's  letter,  that  applications  for  Intermediate  policies  were 
not  to  be  accepted  from  persons  engaged  in  the  manufacture  or 
sale  of  intoxicants  or  the  manufacture  of  explosives.  Many 
other  dangerous  or  unhealthy  occupations  were,  however,  also 
prescribed  against  in  the  regular  instructions  sent  to  agents  in 
reference  to  this  class  of  policies.  Among  others,  applications 
were  not  to  be  accepted  from  coal-miners,  potters,  asbestos 
workers,  caisson  workers,  cement-mill  employees,  glass-blowers 
and  gatherers,  match-makers,  mirror-makers,  rubber-makers, 
smelters,  starch  workers,  white-lead  workers,  etc.,  etc.  These 
restrictions  were  based  entirely  on  the  then  existing  state  of 
knowledge  as  regards  the  accident  and  disease  liability  of  men 
employed  in  various  occupations,  and  they  have  been  subject  to 
important  modification  as  subsequent  investigations  have  made  a 
less  restrictive  practice  possible.  Thus,  for  instance,  in  conse- 
quence of  a  thorough  investigation  of  the  facts  pertaining  to  men 
employed  in  American  coal-mines,  native  coal-miners,  on  account 
of  their  lesser  liability  to  fatal  accidents,  have  been  removed  from 
the  list  of  prohibited  occupations.  A  similar  investigation  into 
the  mortality  of  potters  brought  to  light  many  previously  un- 
known facts,  on  the  basis  of  which  it  was  possible  to  accept  the 
larger  proportion  of  men  employed  in  this  occupation.  On 
account  of  the  large  number  of  lives  under  observation  in  the 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l897~'98.      247 

Industrial  department,  The  Prudential  has  gradually  accumu- 
lated a  body  of  exceptionally  valuable  facts  pertaining  to  the 
mortality  of  persons  in  different  occupations,  and  in  the  light  of 
its  own  experience  it  will  be  possible  in  the  future,  as  it  has  been 
in  the  past,  to  make  most  important  modifications  in  the  method 
of  dealing  with  applicants  engaged  in  dangerous  or  hazardous 
occupations,  and  possibly  with  a  class  of  sub-standard  lives,  now 
under  special  observation  by  the  Medical  department. 

The  Company  this  year  lost  by  death  the  service  of  another 
faithful  employee,  Mr.  Thomas  Haggart,  Superintendent  of  the 
Denver  District.  I  quote  the  following  brief  biographical  sketch 
from  The  Prudential  Weekly  Record  of  September  27,  1897  : — 

With  great  regret  we  are  obliged  to  announce  the  death  of  Super- 
intendent Thomas  Haggart,  of  Denver,  Col. 

Mr.  Haggart's  career  in  the  Industrial  insurance  business  has  been  a 
notably  successful  one,  and  we  can,  without  any  exaggeration,  say  that  in 
his  death  the  Company  loses  one  of  the  most  faithful,  loyal  and  progressive 
men  in  its  entire  service. 

He  was  a  typical  field  man  ;  nothing  suited  him  better  than  the  varied 
and  arduous  work  of  carrying  on  a  superintendency. 

He  took  the  keenest  delight  in  overcoming  obstacles  and  difficulties  ; 
in  personally  assisting  and  helping  those  of  his  Agents  and  Assistants  in 
trouble. 

Mr.  Haggart  entered  the  service  of  the  Company  on  September  8,  1882, 
and  among  the  last  things  he  was  able  to  do  was  to  sign  for  his  gold  medal 
for  fifteen  years'  continuous  and  honorable  service. 

Those  of  the  older  men  in  our  service  who  had  the  privilege  of  knowing 
Mr.  Haggart  will  fully  appreciate  the  loss  we  have  sustained,  and,  while  we 
were  prepared  for  it,  through  the  long  illness  that  preceded  his  death,  yet 
the  removal  of  so  prominent  a  figure  in  our  field  operations  comes  as  a 
shock  to  one  and  all. 


The  results  of  the  business  operations  during  1897  had  been 
very  satisfactory.  The  Industrial  policy-holders  now  exceeded 
2,658,000,  while  the  policy-holders  in  the  Ordinary  department 
numbered  52,583.  The  assets  had  increased  to  $23,984,000,  and 
the  liabilities  to  $18,744,000,  leaving  a  surplus  of  $5,240,000. 

In  commenting  upon  the  progress  made  by  the  Industrial 
companies  during  the  year,  the  Baltimore  Underwriter  referred 
to  Industrial  insurance  as  "  one  of  the  wonders  of  the  age,"  and 
from  an  article  of  some  length  I  make  the  following  extracts  as 
an  indication  of  the  increasing  appreciation  of  this  form  of 


248  HISTORY   OF  THE   PRUDENTIAL. 

insurance  on  the  part  of  those  best  qualified  to  judge  of  its  value 
from  the  standpoint  of  public  policy  : — 

Industrial  insurance  has  become  one  of  the  wonders  of  the  age.  The 
period  of  its  active  development  in  this  country  dates  back  only  twenty-one 
years,  yet  the  capabilities  of  the  accretion  of  diminutive  payments — five  and 
ten  cents  a  week — would  be  incredible  were  not  the  demonstration  con- 
stantly placed  before  us. 

What  it  has  wrought  in  such  a  brief  period  along  the  lines  of  thrift  and 
saving,  what  it  is  doing  from  day  to  day  in  the  alleviation  of  sorrow  and 
misery  in  the  homes  of  the  poor  and  the  lowly,  the  children  of  toil  and  pri- 
vation, we  shall  never  know  ;  we  can  only  faintly  conjecture.  It  is  hard  to 
realize  that  in  this  wonderful  business  more  than  seven  million  policies  are 
in  force,  that  in  its  work  of  benefaction  it  is  paying  out  fifteen  millions  of 
dollars  annually,  and  that  it  gives  employment  to  more  than  thirty  thousand 
agents. 

It  is  doubtful  whether,  in  the  entire  history  of  life  insurance, 
any  other  single  year  represents  efforts  and  results  destined  to 
bring  about  such  vast  and  permanent  improvements  as  must 
naturally  follow  The  Prudential's  policy  of  liberality  outlined 
during  1897.  In  his  annual  review  Mr.  Dryden  touched  upon 
these  points  in  his  letter  to  the  field  force  as  follows  : — 

The  year  1897  will  be  memorable  in  the  history  of  Industrial  Insurance, 
because  in  that  year  The  Prudential  Insurance  Company  inaugurated  a 
new  era  by  issuing  an  Industrial  policy  containing  Cash  Dividend  and 
Insurance  Dividend  [Mortuary  Dividend]  features  and  promising  liberal 
Paid-up  and  Cash-Surrender  Values, — a  policy  hitherto  unknown  in  the 
Industrial  Field.  The  magnificent  amount  of  insurance  written  during  the 
year  just  past,  without  any  extra  effort  on  the  part  of  the  Field  Staff,  is 
sufficient  evidence  that  these  great  concessions  have  been  appreciated  by  the 
insuring  public. 

The  year  1897,  however,  was  marked  by  still  greater  liberality  on  the 
part  of  the  Company,  in  that  the  concessions  to  the  new  policy-holders,  as  has 
always  been  the  practice  of  the  Company,  were  made  to  apply  [equally]  to  its 
old  policy-holders.  Liberal  Cash  Dividends  were  paid  on  policies  issued  in 
1877  and  1882,  and  Additional  Benefits  in  case  of  death  were  paid  on  all  policies 
on  which  five  or  more  years'  premiums  had  been  paid.  In  every  instance 
these  dividends  have  been  a  voluntary  concession — not  promised  by  the 
Company,  not  expected  by  the  policy-holder.  At  the  time  these  policies 
were  issued,  the  fact  of  their  eventually  earning  for  their  holders  substantial 
dividends  was  wholly  unlocked  for. 

We  have  studied  very  carefully  our  experience  as  regards  these  divi- 
dends during  1897,  and  now  believe  that  we  can  safely  offer  a  similar  con- 
cession for  the  year  1898.  In  1897  the  Cash  Dividends  applied  to  insurances 
amounting  to  $2,000,000 ;  in  1898  they  will  apply  to  insurances  of  $3,000,000. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l897~'98.       249 

In  1897  the  Additional  Benefits  applied  to  insurances  amounting  to  $130,- 
000,000;  in  1898  these  insurances  will  amount  to  $150,000,000.  In  addition, 
the  rate  of  the  1898  dividends  is  considerably  higher  than  in  1897.  So  that 
the  total  amount  of  cash  to  be  paid  in  1898  will  be  almost  double  that  of  the 
preceding  year. 

The  year  just  past,  both  in  Industrial  and  in  Ordinary,  has  been  one  of 
which  the  agency  force  of  The  Prudential  has  every  right  to  be  more  than 
proud.  The  character  and  stability  of  the  great  mass  of  the  business  placed  on 
our  books  has  been  above  criticism.  The  sterling  worth  and  loyalty  of  our 
Field  Force  were  never  more  in  evidence  than  to-day.  From  these  two  sources, 
— the  nature  of  the  business  in  force  and  the  high  standing  of  the  men  who 
have  written  that  business, — from  the  fact  that  The  Prudential  policy, 
whether  Industrial  or  Ordinary,  is  the  best  policy  for  the  people,  and  from 
the  great  impetus  gained  during  1897  in  both  branches  of  the  business,  we 
fully  expect  that  from  every  desirable  standpoint  the  year  1898  will  be  the 
greatest,  proudest  year  of  our  Company's  life. 

These  extracts  will  make  clear  the  Company's  position  and 
explain  the  far-reaching  consequences  involved  in  so  distinct  a 
step  in  advance  as  the  granting  of  dividends  and  cash-surrender 
values  to  the  holders  of  Industrial  policies.  And  it  may  here 
be  added  that,  though  only  two  years  have  passed  since  The 
Prudential  first  commenced  to  place  Industrial  policy-holders  on 
practically  the  same  basis  as  Ordinary  policy-holders,  the  Com- 
pany's experience  has  made  it  clear  that  it  will  be  possible  and 
expedient  to  continue  in  the  future  the  same  course  of  prudent 
liberality  as  has  been  the  Company's  practice  in  the  past.  How- 
ever satisfactory  the  results  accomplished  had  been,  it  became 
more  evident  than  ever  that  the  Company's  work  had  but  just 
commenced,  and  that,  in  other  words,  vast  opportunities  were 
being  neglected  for  the  more  rapid  extension  of  The  Prudential's 
business  operations.  While  a  very  considerable  number  of 
persons  had  been  insured,  the  efforts  thus  far  put  forward  to 
reach  all  sections  of  the  community  had  been  less  systematic  and 
thorough  than  was  necessary  to  produce  the  best  results.  Ac- 
cordingly, in  the  early  part  of  the  year  it  was  determined  to 
inaugurate  new  methods  of  placing  the  objects  and  aims  of 
Industrial  insurance  before  the  public,  and  by  direction  of  the 
Vice-President  "a  straight  canvassing  campaign"  was  com- 
menced, which  has  been  productive  of  excellent  results.  To 
explain  the  meaning  of  this  term  it  must  be  understood  that  in 
straight  canvassing  agents  are  required  to  visit  every  house,  and 
every  floor,  and  to  solicit  directly  every  adult  member  of  the 


250  HISTORY  OF  THE  PRUDENTIAL. 

family,  whether  rich  or  poor,  holding  out  inducements  to  insure 
on  the  Industrial,  the  Intermediate  or  the  Ordinary  plan  of  life 
insurance.  I  can  not  do  better  than  quote  from  the  Vice- 
President's  letter  of  February  28,  1898,  as  follows  :— 

Your  attention  is  called  to  a  matter  of  paramount  importance  to  Pruden- 
tial interests.  We  refer  to  the  urgent  need  of  more  Straight  Canvassing. 

Although  the  debits  are  well  taken  care  of,  and  a  proper  amount  of  busi- 
ness written  on  them,  the  great  mass  of  the  population  are  not  approached 
on  the  subject  of  Life  Insurance  by  onr  Agents.  Thousands  and  tens  of 
thousands  of  people  in  the  different  cities  are  never  asked  to  take  out 
Prudential  policies,  although  they  are  in  need  of  the  protection  our  plans 
afford. 

The  very  foundations  of  the  Company  were  laid  by  Straight  Canvassing, 
and  wherever  it  extends  operations  it  depends  on  systematic  house-to-house 
solicitation  to  acquire  membership  in  the  new  territory. 

The  Prudential  must  look  to  its  Agency  force  for  business ;  one  of  the 
principal  duties  of  the  Agent  is  to  canvass.  An  Agent  who  is  a  mere 
collector  falls  short  of  our  requirements.  We  want  those  who  collect 
promptly  and  canvass  thoroughly,  employing  their  time  to  the  best  advan- 
tage in  forwarding  our  interests. 

We  shall  insist  upon  more  Straight  Canvassing  than  has  been  done  of 
late,  for  we  know  it  will  be  productive  of  much  good  to  all  concerned. 

The  burden  of  responsibility  will  not  all  rest  with  the  Agent.  We  shall 
expect  Superintendents  and  Assistants  to  do  their  part ;  the  former  to  advise 
and  plan,  counselling  and  encouraging  his  subordinates,  while  the  latter 
should  give  practical  help  to  their  Agents  in  the  Field  by  assisting  them  in 
the  work  of  canvassing.  The  Collections  should  be  finished  as  soon  as  pos- 
sible, so  that  everybody  may  go  to  the  Field  and  display  that  activity  which 
will  assure  satisfactory  returns. 

The  Prudential  Field  Force  are  in  splendid  position  for  canvassing.  The}' 
represent  a  sound  Company,  offering  the  best  forms  of  policies,  Industrial 
and  Ordinary. 

Our  men  are  backed  up  by  liberal  advertising.  The  name  of  The  Pruden- 
tial is  known  through  the  length  and  breadth  of  this  land,  and  if  business 
be  asked  for  it  can  be  obtained.  Straight  Canvassing  will  prove  very  profit- 
able if  our  representatives  but  measure  up  to  their  opportunities.  In  old  or 
new  Districts  the  chances  for  business  are  good.  No  Field  has  been  so  well 
worked  that  more  can  not  be  secured. 

We  trust  to  see  a  hearty  and  lasting  response  to  this  call  for  action  ;  that 
our  representatives  will  awake  to  the  possibilities  of  the  occasion  and  be  on 
the  alert  to  grasp  all  the  opportunity  afforded  to  extend  the  circle  of  Pruden- 
tial policy-holders. 

To  illustrate  the  thoroughness  with  which  this  work  of 
straight  canvassing  was  carried  on,  I  reproduce  below  the  report 
required  of  the  superintendent  on  the  results  accomplished  by 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l897~'98.      251 

both  agents  and  assistants  in  addition  to  their  regular  duties  of 
collecting  the  weekly  premiums  from  the  insured  : — 

L,ESr,iE  D.  WARD,  ESQ.,  Vice-President. 

Dear  Sir: — I  would  report  that Industrial  applications,  rep- 
resenting an  aggregate  in  weekly  premiums  of  $ ,  and 

Ordinary  applications,  representing  $ of  insurance,  were  secured 

in  my  District  on  straight  canvass  during  the  week  commencing 

The  Assistant  most  successful  in  Industrial  was  Mr. , 

in  whose  District applications,  aggregating  in  weekly  premiums 

,  were  written. 

The  Assistant  most  successful  in  Ordinary  was  Mr , 

in  whose  District applications,  representing  $ of 

insurance,  were  written. 

The  Agent  most  successful  in  Industrial  was  Mr , 

under  Assistant ,  who  secured Industrial  appli- 
cations with  weekly  premiums  aggregating  $ 

The  Agent  most  successful  in  Ordinary  was  Mr , 

under  Assistant ,  who  secured applications, 

representing  $ of  insurance. 

In  a  supplementary  letter,  the  Vice-President  pointed  out 
that  ' '  By  the  use  of  this  report  we  will  be  able  to  keep  in  touch 
with  the  operations  in  your  superintendency  in  straight  canvass- 
ing, and  this  information  will  not  only  be  of  value  to  ourselves, 
but  of  advantage  to  those  who  show  a  disposition  to  meet  our 
desires  in  this  matter. ' ' 

Coincident  with  the  attempt  to  extend  the  business  operations 
of  the  Company  by  means  of  a  more  thorough  canvass  of  the 
territory  in  which  the  Company's  offices  were  located,  a  decided 
effort  was  made  this  year,  and  continued  thereafter,  to  reduce 
to  the  lowest  possible  minimum  the  lapse-rate  on  old  and  new 
business.  While  it  can  not  be  too  often  pointed  out  that  the 
larger  portion  of  Industrial  lapses  is  of  policies  on  which  practi- 
cally nothing  has  been  paid,  nevertheless  more  stringent  rules 
were  applied  to  the  conduct  of  the  business  in  this  respect,  and 
material  results  followed  a  practice  which  could  not  be  developed 
to  its  present  degree  until  sufficient  experience  had  been  gained. 
As  has  previously  been  pointed  out,  the  lapse-rate  of  the  Indus- 
trial business  affects  much  more  seriously  the  welfare  of  the 
companies  than  the  welfare  of  the  insured,  as  the  majority  of 


252  HISTORY  OF  THE   PRUDENTIAL. 

lapses  represent  a  distinct  loss  to  the  former.  Therefore,  by 
insisting  upon  the  watch -word  that  ' '  The  business  that  stays  is 
the  business  that  pays,"  agents  were  induced  to  devote  more 
time  and  attention  to  the  writing  of  business  which  from  the 
outset  gave  every  indication  of  being  a  permanent  addition  to  the 
Company's  insurance  in  force.  However  successful  The  Pruden- 
tial has  been  in  this  respect,  it  will  nevertheless  be  at  all  times 
a  most  difficult  and  serious  problem  to  avoid  a  large  number  of 
lapses  in  the  active  efforts  to  materially  increase  or  extend  the 
business.  Lapses  very  largely  represent  bookkeepers'  statements 
made  for  actuarial  purposes,  and  are  really  no  financial  loss  to 
the  insured,  who,  for  a  time  at  least,  have  enjoyed  a  certain 
amount  of  insurance  protection.  All  lapses  during  the  early 
policy  years  represent  a  loss  to  the  Company,  are  detrimental  to 
the  business  in  general,  and  constitute  a  problem  to  the  solution 
of  which  the  Company's  best  efforts  and  thoughts  have  been 
devoted  from  the  day  the  first  application  for  Industrial  insurance 
was  received,  on  November  10,  1875. 

Some  of  the  points  previously  touched  upon  in  Mr.  Dryden's 
letter  of  January  ist  were  reiterated  in  his  address  at  the  Com- 
pany's banquet  at  the  Waldorf-Astoria  on  February  10,  1898.  I 
make  a  few  extracts  from  this  address,  which  forms  one  of  the 
most  interesting  contributions  made  to  the  literature  of  the 
Company's  history  during  recent  years  : — 

In  this  period  of  two  years  the  Company  has  perfected  and  introduced 
to  the  American  public  an  Industrial  policy  which  stands  in  the  very  fore- 
ground as  the  most  equitable,  the  fairest  and  the  best  policy  for  the  masses 
of  this  Republic.  Whether  the  comparison  be  limited  to  companies  of  this 
American  continent,  or  to  those  great  companies  which  we  respect  across 
the  sea,  it  stands  far  in  advance. 

For  the  first  time  the  holder  of  an  Industrial  policy  under  The  Pru- 
dential's system  and  practice  stands  practically  on  an  equality  with  the  holder 
of  the  Ordinary  policy. 

We  have  recently  done  another  thing,  the  results  of  which  rest  with 
you  and  not  with  us.  We  have  determined  to  put  every  Industrial  worker 
upon  his  honor  and  forego  the  requirement  for  a  bond.  We  say  to  him  in 
effect  that  we  believe  him  to  be  a  gentleman  and  an  honest  man,  and  shall 
treat  him  as  such  until  he  proves  himself  unworthy  of  it. 

We  stand  here  to-night,  gentlemen,  with  a  record  behind  us  of  twenty- 
two  years.  That  is  the  span  of  this  Company's  life.  The  figures  of  most  of 
the  companies  of  the  country  are  not  as  yet  obtainable  for  this  year.  Of 
the  sixty  companies  mentioned  in  the  "Spectator  Pocket  Index"  of  last 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l8gj-<)8.      253 

year,  fifteen  were  of  the  same  age  or  younger  than  The  Prudential.  Of 
those  fifteen  but  one  or  two  had  as  large  an  income  for  the  entire  year  as 
The  Prudential  had  in  two  weeks. 

Now  I  think,  gentlemen,  that  there  are  some  fundamental  reasons  why 
this  fact  is  as  it  is.  In  the  first  place  we  introduced  a  system  of  business 
here  twenty-two  years  ago,  new  to  our  people,  but  which  met  an  existing 
need.  We  have  tried  sincerely  and  conscientiously  to  adapt  that  system  to 
the  condition  of  our  people.  We  have  endeavored  to  establish  underneath 
all,  at  the  very  base  of  the  Company,  the  underlying  principle  of  equity 
and  right,  and  have  tried  to  inculcate  among  our  friends  and  workers  the 
belief  that  no  matter  who  the  party  may  be,  however  humble  his  position, 
whether  policy-holder  or  servant,  he  shall  have  fair,  liberal  and  honest 
treatment.  And  upon  that  line  our  business  must  continue. 

Those  who  have  carefully  followed  the  writer  in  his  survey 
of  the  early  and  present-day  conditions,  as  relating  to  the 
growth  and  development  of  The  Prudential,  will  agree  that  the 
words  of  Mr.  Dry  den  are  fully  justified  by  the  facts.  I  feel 
satisfied  that  this  conviction  rests  equally  strong  with  the  millions 
of  policy-holders  of  the  Company,  who  are  to-day,  as  they  have 
been  in  the  past,  the  most  faithful  believers  in  the  destiny  of 
The  Prudential. 

On  February  15,  1898,  occurred  an  event  which  has  since 
become  history,  and  to  which,  no  doubt,  must  be  largely  attrib- 
uted the  war  of  the  United  States  with  the  kingdom  of  Spain. 
In  the  explosion  of  the  U.  S.  Battleship  Maine,  this  country  lost 
the  lives  of  253  men  whose  memory  is  consecrated  to  a  noble 
cause.  Among  the  country's  heroes  few,  if  any,  will  ever  be 
held  in  higher  esteem  and  more  affectionate  regard.  Of  those 
who  perished  in  the  disaster,  seventeen  sailors  and  marines  were 
insured  with  The  Prudential,  holding  twenty-one  Industrial  poli- 
cies for  an  aggregate  sum  of  $3,529.  It  has  seemed  to  me  fitting 
to  incorporate  into  this  work  the  names  of  those  who  proved  them- 
selves their  country's  heroes  in  peace  as  well  as  in  war.  Those 
who  hold  and  believe  that  peace  has  its  victories  as  well  as  war, 
and  who  accept  the  modern  dictum  of  social  morality,  that  those 
who  provide  for  themselves  and  their  dependents  through  the 
medium  of  life  insurance  are  deserving  of  the  highest  praise,  will 
readily  concede  that  the  names  of  those  here  permanently  placed 
on  record  are  deserving  of  greater  honor  than  those  who 
thoughtlessly  shirk  one  of  life's  imperative  duties  by  making 
no  provision  for  life's  contingencies  on  a  plan  and  by  a  method 


254  HISTORY  OF  THE  PRUDENTIAL. 

fully  within  the  reach  of  every  one,  no  matter  how  humble  or 
how  poor*  : — 

NAMES  OF  POLICY-HOLDERS  OF  THE  PRUDENTIAL  WHOSE  LIVES  WERE 
LOST  IN  THE  EXPLOSION  OF  THE  U.  S.  S.  "  MAINE,"  FEBRUARY  15, 18984 

1.  C.  Hauck, Landsman, Brooklyn. 

2.  W.  Hamberger, Landsman, Jersey  City. 

3.  E.  P.  Graham, Coal-passer, Jersey  City. 

4.  R.  Wilson, Chief  Quartermaster,    ....  Brooklyn. 

5.  H.  J.  Gross, Landsman, New  York. 

6.  T.J.Jones,2 Coal-passer, Brooklyn. 

7.  J.  H.  Dierking, Drummer, Brooklyn. 

8.  T.  M.  Cole, Bayman, Philadelphia. 

9.  M.  F.  Harris, Quartermaster, New  York. 

10.  T.  Clark, Coal-heaver, Newark. 

n.  F.  L.  Jernee, Coal-passer,      Newark. 

12.  F.  F   Butler, Machinist, Harrison. 

13.  T.  J.  Quigley, Plumber, New  York. 

14.  A.  J.  Holland, Quartermaster, Brooklyn. 

15.  H.  Auchenbach,      .    .    .    .Fireman, Sheridan,  Pa. 

16.  F.  C.  Holzrier,         ....  Seaman, New  York. 

17.  J.  J.  Shea,2 Coal-passer, New  York. 

1  Had  three  policies.  *  Had  two  policies. 

While  it  was  not  until  April  2 1  st  that  a  state  of  war  was 
declared  to  exist  between  the  United  States  and  Spain,  as  early 
as  April  Qth  Mr.  Dryden  addressed  a  circular  letter  to  the  field 
force  with  reference  to  permission  to  the  Company's  policy- 
holders  in  the  army  or  navy  of  the  United  States  or  the  militia 
to  serve  in  time  of  war.  I  quote  from  the  letter  the  following 
extracts,  to  indicate  the  Company's  practice  in  dealing  with  war 
risks  in  both  departments  of  the  business  : — 

In  consequence  of  the  present  unsettled  state  of  National  affairs,  a 
number  of  inquiries  have  been  made  as  to  the  course  The  Prudential  would 
take  with  regard  to  those  policy-holders  who  may  serve  in  the  Army  or 
Navy  of  the  United  States  or  the  Militia  in  time  of  war. 

The  question  is  a  serious  one,  in  view  of  the  large  number  of  policy- 
holders  of  The  Prudential  who  might  be  affected  by  an  outbreak  of  war. 
After  careful  consideration,  we  have  decided  as  follows  : — 

As  to  all  policies,  whether  Industrial,  Intermediate,  or  Ordinary,  which 
may  be  in  force  at  the  time  of  declaration  of  war,  permission  is  hereby  given 

*  The  only  American  sailor  killed  in  the  naval  battle  of  Santiago  on 
July  3,  1898,  George  Ellis,  Chief  Yeoman  of  the  Cruiser  Brooklyn,  was 
insured  in  The  Prudential  under  an  Industrial  policy. 

f  Appendix  to  the  Report  of  the  Chief  of  the  Bureau  of  Navigation, 
p.  ii  et  seq.  Wash.,  1898. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l897~'98.      255 


for  the  insured  under  such  policies  to  serve  in  the  Army  or  Navy  of  the 
United  States,  or  Militia  of  any  State  of  the  United  States,  in  time  of  war, 
and  no  written  permission  for  such  service  need  be  obtained  from  the 
Company,  nor  will  any  extra  premium  be  charged.  It  will  not  be  necessary 
to  send  in  any  policy  for  endorsement. 

It  will  be  observed,  on  examination,  that  permission  was 
granted  by  President  Dryden  to  the  then  Prudential  policy-holders 
to  serve  in  the  army  or  navy  of  the  United  States,  or  the  militia, 
without  the  charge  of  an  extra  rate,  and  to  facilitate  matters  no 
written  permission  for  such  service  was  required.  These  rules  and 
regulations  were  supplemented  by  a  circular,  dated  November  17, 
1898,  with  reference  to  prospective  policy-holders. in  the  Ordinary 
department,  but  want  of  space  forbids  an  extended  discussion 
here  of  an  interesting  phase  of  life-insurance  history. 

As  a  further  matter  of  permanent  interest,  I  give  below  a 
table  showing  the  Company's  Industrial  war  mortality  experi- 
ence, from  February  15,  1898,  to  December  31,  1899,  and  includ- 
ing the  loss  of  life  caused  by  the  explosion  of  the  Maine : — 

WAR  MORTALITY  EXPERIENCE,  1898  AND  1899. 
INDUSTRIAL,  DEPARTMENT. 


No.  OP 
POLICIES. 

AMT.  OF 
INSURANCE. 

Lives  lost  by  the  explosion  of  the  Maine 

21 

Deaths  from  battle  and  disease  — 
In  the  United  States,  in  hospitals  and  army  camps, 
On  Transports,  

148 

•Poio-'y  "" 

22,411  oo 
762  oo 

In  Cuba   

2*\ 

In  Puerto  Rico,    ...        

-*o 

jr 

In  Hawaii,  

o 

In  the  Philippine  Islands,  

IO 

uo/  w 
2  889  OO 

Total  deaths,   

218 

^•jc  cnR  oo 

•*JW 

•iPoO»Ouc>  "^ 

Another  aspect  of  the  disturbed  state  of  national  affairs 
resulting  from  the  war  with  Spain,  and  directly  affecting  the 
interests  of  Industrial  policy-holders,  was  the  passage  of  the  War 
Revenue  Tax  Act  on  July  i,  1898,  providing  that  policies  issued 
on  the  Industrial  weekly-payment  plan  should  pay  a  Revenue 
Tax  of  40  per  cent,  of  the  first  weekly  premium,  being  equal,  in 


256  HISTORY   OF   THE   PRUDENTIAL. 

other  words,  to  a  tax  of  four  cents  on  every  ten-cent  policy  issued 
by  the  Company,  irrespective  of  the  fact  whether  the  policy  was 
actually  placed  or  not.  Ordinary  life  policies  were  taxed  eight 
cents  for  each  $100  or  fraction  thereof  of  the  amount  of  insur- 
ance. With  reference  to  the  Revenue  Tax  on  Industrial  policies 
the  subsequent  practice  of  the  Company  was  outlined  in  a  letter  of 
the  President,  dated  July  2,  1898,  stating  that  the  Company 
would  bear  the  entire  expense  of  the  war  tax  on  the  Industrial 
business.  With  reference  to  Ordinary  policies,  a  letter,  under 
date  of  June  28th,  informed  the  members  of  the  field  force  that 
the  revenue  stamps  would  have  to  be  paid  for  by  the  prospective 
policy-holders,  but,  under  date  of  October  5th,  this  was  modified 
in  the  manner  that  on  and  after  that  date,  until  otherwise 
directed,  the  Company  would  also  pay  for  the  revenue  tax  on 
Ordinary  policies.* 

*A  tax  on  insurance,  according  to  Mill  ("Principles  of  Political 
Economy,"  Book  V.,  Chap.  VII.),  "  is  a  direct  discouragement  of  prudence 
and  forethought,"  and  few  have  tried  to  defend  it  as  a  means  of  raising 
revenue,  except  on  the  ground  of  political  expediency.  One  of  the  ear- 
liest writers  on  the  subject  well  expressed  the  views  held  by  economists 
and  life  insurance  managers  that  ' '  A  tax  on  insurance  is  a  tax  not  only 
upon  industry,  but  upon  prudence  and  frugality,  and  the  American  system 
seems  to  be  far  worse  than  that  of  which  we  have  been  so  long  complaining 
in  Great  Britain  in  respect  of  Fire  Insurance,  and  which,  by  such  com- 
plaints, we  have  recently  compelled  our  Government  to  a  large  extent  to 
forego."  (Sir  S.  Morton  Peto  in  "Resources  of  America,"  p.  377.  Lon- 
don, 1866.)  An  equally  emphatic  statement  to  the  same  effect  is  to  be 
found  in  the  Insurance  Times  of  1868  (p.  169)  on  the  Internal  Revenue 
Acts  of  1862  and  1864  :  ' '  This  is  probably  necessary  for  the  present,  although 
all  taxes  on  prudence  are  open  to  serious  objection  on  principle  and  ought 
to  be  dropped  as  soon  as  possible.  *  *  *  *  A  man  may  save  from  his 
income  and  be  the  better  and  richer  for  it,  but  what  statesman  would  wish 
to  compel  citizens  to  economize  in  insurance?"  Charles  Sumner,  also, 
according  to  the  Insurance  Monitor  of  April,  1884,  "  who  had  examined  the 
subject  in  his  usual  thorough  and  conscientious  manner,"  well  said  that 
"  the  proposition  to  tax  life  insurance  was  an  attempt  to  impose  a  tax  upon  a 
tax,"  but  this  view,  unfortunately,  has  found  favor  with  but  few  legislators, 
who  are,  generally  speaking,  either  ignorant  of,  or  indifferent  to,  the  fact 
that  taxes  on  life  insurance  are,  as  a  matter  of  course,  paid  by  the  policy- 
holders.  As  a  pertinent  illustration  I  may  add  the  statement  that  in  1899 
The  Prudential  paid  $448,855  in  taxes  and  license  fees,  all  of  which  would 
otherwise  have  been  returned  to  the  policy-holders  in  the  form  of  increased 
dividends,  larger  additional  benefits,  or  increased  cash-surrender  values. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l897-'98.      257 

A  very  material  improvement  was  made  in  the  payment  of 
Industrial  claims,  of  which  earlier  mention  would  have  been 
made  but  for  the  continuity  of  events  connected  with  the  war 
measures  adopted  by  the  Company  for  the  conduct  of  the  business. 
Under  date  of  April  4th,  the  Vice- President  of  the  Company 
communicated  to  the  field  force  new  instructions  with  reference 
to  the  payment  of  Industrial  claims,  which  I  can  not  do  better 
than  quote  in  an  abbreviated  form  : — 

INDUSTRIAL  CLAIM  PAYMENTS. 

The  Prudential  was  the  first  Company  in  this  country  to  pay  death 
claims  immediately  upon  receipt  of  proofs  of  death  at  the  Home  Office.  We 
have  now  decided,  in  keeping  with  the  Company's  settled  policy  of  doing 
the  most  good  in  the  most  practical  way,  to  take  a  step  still  further  in 
advance.  Even  the  slight  delay  of  sending  the  claim  papers  to  the  Home 
Office  and  the  time  necessary  for  the  check  in  payment  to  reach  the  Field 
means  a  great  deal  to  the  bereaved  family  in  a  time  of  distress. 

To  overcome  this  delay  we  are  going  to  entrust  you  with  the  payment 
of  all  claims  not  exceeding  $130  on  Regular  White  Industrial  policies  imme- 
diately on  completion  of  the  usual  proofs  of  death,  and  before  forwarding 
the  papers  to  this  office.  For  the  present,  claims  on  colored  lives,  Endow- 
ment policies  and  all  claims  amounting  to  more  than  $130  are  to  be  for- 
warded in  the  usual  way,  and,  after  examination  at  this  office,  if  they  are  to 
be  paid  without  further  correspondence,  we  will  telegraph  you  what  amount 
to  pay.  All  doubtful  claims  must  be  referred  to  the  Home  Office. 

We  feel  confident  that  you  will  appreciate  the  responsibility  of  this 
change  and  exercise  the  same  care  that  you  would  if  every  dollar  you  paid 
out  belonged  to  yourself. 

The  same  forms  will  be  used  as  heretofore,  and  must  be  completed  be- 
fore payment  is  made.  The  policy  must  be  produced  in  every  case ;  if  a 
duplicate  is  submitted,  no  payment  shall  be  made  until  you  have  satisfied 
yourself  that  the  original  is  not  in  existence.  Cases  where  no  policy  is  pre- 
sented must  be  referred  to  this  office. 

Careful  investigation  must  be  made  as  to  the  insurable  interest  of 
claimant  in  accordance  with  Rule  4  for  the  adjustment  of  claims,  and  doubt- 
ful cases  must  be  referred  to  the  Home  Office. 

All  claims  on  policies  bearing  an  endorsement  other  than  for  additional 
insurance,  revival  lien  or  change  of  age,  should  be  sent  to  the  Home  Office 
for  adjustment. 

Insurance  in  Other  Companies. — In  case  of  Infantile  policies  where 
there  are  other  insurances  in  other  companies  and  the  total  amount  of  pre- 
mium exceeds  ten  cents,  they  should  be  referred  to  the  Home  Office. 

After  investigation  of  a  claim,  if  you  are  perfectly  satisfied  that  it  is  a 
valid  one,  you  may  draw  a  check  to  the  order  of  the  claimant  on  the  form 
herewith  sent  you,  against  our  deposit  in  the  bank.  The  check  must  be  en- 
dorsed by  the  claimant  and  presented  for  payment  in  the  usual  way.  The 


258  HISTORY  OF  THE   PRUDENTIAL. 

proofs  of  death  should  contain  amount  paid,  date  of  payment,  check  number, 
and,  with  claimant's  receipt  attached,  be  immediately  forwarded  to  this 
office. 


In  addition  to  explicit  instructions  governing  the  immediate 
payment  of  Industrial  claims  to  the  local  representatives  of  the 
Company,  a  telegraphic  code  was  adopted  for  use  in  the  payment 
of  claims  by  telegraph,  and  it  will  thus  be  apparent  that  the 
Company  adopted  every  possible  means  of  improving  its  relation 
with  policy-holders  in  this  direction.  Under  date  of  November 
4,  1898,  after  the  system  of  immediate  claim  payments  for  certain 
amounts  had  had  a  sufficient  trial,  it  was  decided  to  make  the 
limitation  for  such  payments  $200,  instead  of  $130,  which  had 
previously  been  the  limit.  The  method  adopted  met  with  uni- 
versal approval  among  the  Company's  beneficiaries,  and  expe- 
rience, now  extending  over  a  sufficient  period  of  time,  has  made 
it  clear  that  the  step  taken  was  a  wise  one,  and,  thus  far,  there 
has  not  been  a  single  instance  in  which  the  Company's  liberal 
practice  has  been  abused. 

Among  other  improvements  made  in  the  administration  of 
the  Company's  business  was  a  change  in  dealing  with  lapses  on 
Industrial  policies  in  cases  where  Ordinary  insurance  had  been 
secured  by  the  same  agent  to  take  the  place  of  the  Industrial. 
It  must  be  understood  that  agents  are  held  responsible  for  lapses 
to  the  extent  that  they  are  required  in  all  cases  to  make  a  net 
increase  in  their  business  in  force,  and  they  have  therefore  to 
replace,  without  compensation,  by  new  policy-holders,  old  policy- 
holders  who,  for  one  reason  or  another,  may  have  lapsed  their 
policies.  This  practice  is  warranted  by  the  inseparable  condition 
of  the  Industrial  field  administration,  that  only  by  holding  the 
agent  personally  responsible  can  unnecessary  lapses  be  avoided, 
and  there  is  in  this  practice  absolute  proof  that  the  Company 
is  sincere  in  its  assertion  that  at  all  times  everything  possible 
has  been  done  to  avoid  lapses  and  retain  policies  on  the  books  of 
the  Company.  However,  with  the  development  of  Industrial- 
Ordinary  insurance, — that  is,  the  extension  of  insurance  prin- 
ciples to  the  more  prosperous  elements  of  the  population, — 
frequent  instances  came  to  the  notice  of  the  Company  where 
Industrial  policies  were  surrendered  for  Ordinary  policies  taken 
out  in  their  place.  To  facilitate  this  form  of  transfer  and  place 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l897~'98.      259 

no  hindrance  in  the  way  of  a  material  improvement  in  his  insur- 
ance contract  on  the  part  of  the  Industrial  policy-holder,  the 
Company,  under  date  of  March  i6th,  over  the  signature  of  the 
Vice-President,  informed  the  field  force  as  follows  : — 

INDUSTRIAL-ORDINARY  LAPSE. 

We  have  been  solicited,  on  several  occasions,  to  release  an  Agent  from 
the  lapse  of  an  Industrial  policy  in  cases  where  Ordinary  insurance  has 
been  secured  by  the  same  Agent  to  take  the  place  of  the  Industrial. 

Generally  speaking,  an  Industrial  policy-holder,  who  decides  to  take 
out  Ordinary  insurance  with  us,  concludes,  also,  to  retain  the  Industrial 
policy  in  force,  looking  upon  the  amount  insured  thereunder  as  a  burial 
fund,  the  new  policy  being  regarded  in  the  light  of  an  estate.  This  is  a  view 
of  the  matter  to  be  encouraged,  for  it  seems  to  be  the  right  one. 

It  may  occasionally  happen,  however,  that  the  lapse  of  an  Industrial 
policy  is  involved  in  the  issue  of  the  Ordinary.  While  we  can  not  see  our 
way  clear  to  releasing  the  Agent  from  the  Industrial  lapse  where  the  insured 
takes  out  Ordinary  insurance  on  the  quarterly  or  semi-annual  premium 
plan,  we  shall  be  willing  to  grant  a  release  from  the  lapse  of  the  Industrial 
policy,  provided  the  insured  takes  out  the  Ordinary  insurance  under  the 
annual  premium  plan. 

You  may  instruct  your  Agents  to  this  effect,  urging  upon  them,  how- 
ever, the  advisability  of  trying  to  keep  both  forms  of  insurance  in  force. 

With  reference  to  the  last  sentence  it  may  be  explained 
that  the  principal  object  of  an  Industrial  policy  being  strictly 
to  meet  burial  expenses,  it  has  been  found  by  experience  that 
in  many  cases,  where  Ordinary  insurance  is  subsequently 
taken  out  by  original  Industrial  policy-holders,  the  Indus- 
trial policy  is  kept  in  force  as  a  burial  provision,  leaving  the 
full  amount  of  the  Ordinary  policy  for  surviving  members  of  the 
family. 

A  change  was  made  this  year  in  the  issue  of  Industrial  poli- 
cies which  was  also  a  decided  and  important  step  forward,  and 
one  which  marks  a  still  further  advance  over  the  methods  employed 
by  other  companies.  It  had  heretofore  been  the  practice  to  date 
new  Industrial  policies  on  the  Monday  of  the  week  following  that 
in  which  they  were  sent  out.  This  practice  was  changed  under 
date  of  March  28th,  and  the  field  force  was  informed  by  a  cir- 
cular letter  from  the  President  that — 

Commencing  with  the  policies  sent  to  the  Agent  to  be  included  in  his 
debit  for  April  nth  [1898],  we  shall  make  the  date  the  Monday  of  the  week 


260  HISTORY  OF  THE   PRUDENTIAL. 

the  applications  were  approved  at  this  office.  Thus  in  return  for  applications 
obtained  during  the  canvass  of  the  week  of  March  28th,  if  they  reach  the 
Home  Office  on  April  4th,  and  are  there  approved,  we  shall  issue  the  policies 
bearing  date  of  April  4th,  instead  of  April  nth,  as  under  the  present  plan. 
The  advantages  of  this  method  will  be  apparent  at  once.  The  Agent  in 
canvassing  can  promise  insurance  at  an  earlier  date  than  now.  He  can 
place  his  business  without  the  delay  which  at  present  occurs,  and  follow 
the  same  up  and  keep  in  closer  touch  with  the  applicants,  collecting  from 
them  each  week — as  the  premiums,  if  the  policies  are  not  granted,  will  be 
returned,  while  if  issued  they  are  in  benefit  at  the  earliest  practical  oppor- 
tunity. 


In  consequence  of  this  concession  new  policy-holders  were 
placed  in  immediate  benefit  for  at  least  a  portion  of  the  face 
value  of  the  policy  practically  from  the  date  application 
was  made.  Only  those  familiar  with  the  actual  operations  of 
an  Industrial  agency  can  fully  realize  the  importance  of  this 
step  taken  by  The  Prudential  in  advance  of  other  Industrial 
companies. 

An  apparently  slight,  but  actually  very  important,  change 
was  made  this  year  with  reference  to  charges  for  premium  receipt- 
books.  It  had  heretofore  been  the  practice  to  charge  policy- 
holders  for  the  premium  receipt-book  which  accompanies  the 
policy,  and  in  which  the  weekly  premiums  are  entered  by  the 
agent,  but  under  date  of  August  i2th  the  field  force  was 
informed  that  thereafter  no  charge  would  be  made  for  premium 
receipt-books,  but  that  the  Company  would  expect  agents  to  use 
the  same  care  in  ordering  and  disposing  of  these  books  as  under 
the  system  formerly  in  force.  When  it  is  considered  that  the 
Company  annually  makes  use  of  a  vast  number  of  such  books, 
the  individual  payment,  however  small,  assumes  considerable 
proportions  in  the  aggregate,  representing  a  not  inconsiderable 
loss  to  the  Company,  which  once  more  was  assumed  for  the  gen- 
eral welfare  of  the  business  and  the  best  interests  of  the  policy- 
holders. 

With  reference  to  the  payment  of  Industrial  Cash  Dividends, 
it  had  been  the  practice  of  the  Company  to  have  the  policy-holders 
call  at  the  office  of  the  Superintendent  and  collect  personally  the 
amounts  due  as  dividends  under  such  policies.  To  facilitate 
matters  it  was  decided,  under  date  of  August  4,  1898,  to  have 
these  dividends  paid  at  the  houses  of  the  insured  by  the  Assistant 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l897~'98.      261 

Superintendent,  and  the  views  of  the  Company  were  outlined  in 
the  following  letter  of  the  Vice-President : — 

INDUSTRIAL  CASH  DIVIDENDS. 

It  is  our  desire  to  pay  these  dividends  as  promptly  as  possible  and  with- 
out causing  any  inconvenience  to  the  policy-holders.  If  this  be  done,  we 
shall  insure  the  greatest  good  to  The  Prudential  and  its  representatives  that 
can  come  through  the  liberal  action  of  the  Company. 

As  a  means  to  this  end,  you  are  authorized  to  have  these  dividends 
adjusted  by  the  Assistant  Superintendents  calling  at  the  home  of  the  parties 
to  whom  dividends  are  payable,  and  there  making  the  proper  settlement. 
Whenever  it  is  practicable  so  to  do,  you  should  try  to  save  the  policy-holders, 
and  others  interested,  the  necessity  of  visiting  your  offices.  If  the  parties 
wish  to  have  the  payment  in  cash,  in  preference  to  other  method  of  settle- 
ment, no  undue  pressure  should  be  brought  to  bear  upon  them  to  change 
their  minds.  Let  the  adjustment  be  made  in  the  manner  most  satisfactory 
to  the  members. 

We  think,  if  proper  care  be  exercised  to  see  that  our  instructions  as  to 
the  method  of  adjusting  dividends  be  carried  out,  the  work  can  be  safely 
entrusted  to  the  Assistant  Superintendents. 

If  you  should  find  it  expedient  so  to  do,  you  may  occasionally  use  the 
services  of  your  reliable  Agents,  so  as  to  relieve  the  Assistant  Superintend- 
ents when  their  other  duties  are  pressing. 

We  shall,  of  course,  expect  you  to  look  closely  after  the  matter,  so  as 
to  fully  protect  us. 

This  step  is  one  fully  in  harmony  with  the  theory  of  Indus- 
trial collections,  in  that  experience  has  made  it  clear  that  working 
people  are  not  in  a  position  to  leave  their  homes  or  workshops  for 
the  purpose  of  paying  premiums  or  even  for  the  occasional  collec- 
tion of  dividends,  and,  to  overcome  possible  objections  to  the 
Company's  early  rule  to  have  Cash  Dividends  paid  at  the  office, 
of  the  Superintendent,  the  same  was  modified  to  meet  the  wishes 
of  the  public  for  the  payment  of  dividends  at  the  homes  of  the 
insured.* 


*  The  collector  in  Industrial  insurance  is  a  necessity,  it  being  one  of  the 
essential  principles  of  the  business  that  the  weekly  premiums  must  be  col- 
lected from  the  house  of  the  insured.  Many  as  have  been  the  efforts  to 
eliminate  the  collector,  by  holding  out  inducements  to  the  insured  to  pay  at 
the  office,  by  offers  of  a  reduction  of  the  premium,  all  such  attempts  have 
proven  a  complete  failure.  It  has  been  brought  out  time  and  again  in  par- 
liamentary investigations  that  without  the  collector  the  entire  system  of 
trading  friendly  societies  would  fall  to  the  ground,  and  that  one  of  the  pri- 
mary causes  of  the  failure  of  Government  insurance  in  England  is  to  be 


262  HISTORY   OF  THE   PRUDENTIAL. 

Among  the  Company's  business  achievements  during  1898 
mention  must  be  made  of  one  of  the  largest  transactions  ever 
consummated  in  Partnership  Life  Insurance  in  the  United  States. 
A  policy  was  issued  during  the  month  of  October  for  $400,000 
for  Partnership  insurance  on  the  four  members  of  the  firm  of 
Hahne  &  Co.  of  the  city  of  Newark.  The  annual  premium  on 
this  policy  was  $13,221,  the  check  for  which  was  dated  October 
20,  1898.  The  firm  of  Hahne  &  Co.  owns  the  largest  depart- 
ment store  in  the  State  of  New  Jersey,  having,  much  like  The 
Prudential,  developed  from  small  beginnings  into  a  structure  of 
vast  proportions.  Before  deciding  in  what  company  the  firm 
would  seek  the  insurance  protection  referred  to,  the  leading  life 
companies  of  the  country  submitted  their  propositions.  No  pol- 
icy, however,  so  completely  satisfied  the  members  of  this  firm  as 
the  contract  of  The  Prudential.  It  is  something  very  considera- 
bly to  the  credit  of  The  Prudential  Insurance  Company  that, 
in  open  competition  with  all  of  the  long-established  old-line 
companies,  it  should  have  been  possible  for  an  institution, 
developed  largely  for  the  purpose  of  extending  the  principles  of 
insurance  to  the  industrial  population,  to  consummate  this  year 
a  transaction  which  ranks  as  one  of  the  largest  and  most  impor- 
tant in  American  life-insurance  history. 

Aside  from  the  increasing  public  appreciation  of  Industrial 
and  Ordinary  insurance  as  offered  to  the  public  by  The 

found  in  the  fact  that  the  Post-office  does  not  employ  collectors  to  call  for 
the  weekly  premiums  at  the  homes  of  the  insured.  The  fact  must  not  be 
overlooked  that  many  of  the  Industrial  policy-holders  hold  policies  for  a 
weekly  premium  of  but  five,  ten  or  fifteen  cents.  Living,  as  these  people 
do,  sometimes  miles  from  other  habitations,  it  naturally  becomes  a  seri- 
ous question  how  to  protect  properly  the  individual  interests  of  every 
policy-holder.  Experience  has  shown  that  it  is  only  by  means  of  the 
"  debit  "  system  of  the  Industrial  companies  and  the  payment  of  a  reason- 
able commission  that  this  function  can  be  properly  discharged.  While  in 
Ordinary  insurance  the  renewal  commissions  on  payments  made  at  the 
office  of  the  agent  are  often  as  high  as  7^  per  cent.,  in  Industrial  insur- 
ance the  agent  receives  15  per  cent,  for  calling  fifty-two  times  a  year  for  the 
premiums  at  the  homes  of  the  insured,  irrespective  of  the  distance  the 
policy-holder  may  live  from  the  office.  If  to  this  amount  of  necessary 
labor  is  added  an  additional  amount  of  effort  required  to  call  more  than  once 
when  the  insured  may  not  be  at  home  or  not  be  in  a  position  to  pay  the 
premium,  it  will  readily  be  conceded  that  the  commission  paid  for  the  col- 
lection of  the  weekly  premiums  is  not  an  unreasonable  one. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,   l897~'98.      263 

Prudential,  official  opinion  was  now  more  than  ever  strongly  and 
emphatically  in  favor  of  life  insurance  for  the  masses  on  the 
Industrial  plan  of  The  Prudential  Insurance  Company.  limiting 
myself  to  a  single  extract  from  official  literature,  I  quote  as 
follows  from  the  26th  annual  report  of  Mr.  John  C.  I^inehan, 
Insurance  Commissioner  of  New  Hampshire  : — 

The  industrial  branch  of  life  insurance  has  been  put  through  a  severe 
test  during  the  past  year,  especially  the  feature  devoted  to  the  insurance  of 
children.  Some  three  years  ago  an  attack  was  made  upon  it  by  a  local  paper, 
and  the  statements  made  at  the  time  were  of  such  a  character  that  an  in- 
vestigation was  deemed  necessary.  The  opinions  of  gentlemen  who  were 
not  interested  in  the  business,  but  whose  professions  gave  them  opportunities 
to  study  its  effect,  were  sought  for,  and  in  every  instance  their  reply  was 
that  it  was  a  great  blessing,  for  in  many  instances  it  was  the  only  kind  of 
protection  working  people  could  afford  to  carry. 

Industrial  insurance  furnishes  one  of  the  greatest  benefits  that  can  be 
received  in  return  for  the  amount  paid,  for  very  often,  in  case  of  death,  the 
insurance  is  all  there  is  left,  either  to  bury  the  dead  or  provide  for  the 
living. 

A  careful  consideration  of  the  subject,  as  well  as  of  the  figures  given, 
and  the  circumstances  from  which  industrial  insurance  originated,  must 
convince  all  fair-minded  men  that  the  business  is  not  only  legitimate  and 
honorable,  but  just  as  essential  to  those  among  whom  it  is  operated  as  the 
other  kind  is  among  those  more  favored  with  the  good  things  of  this  world. 

To  this  recognition  of  Industrial  insurance  from  the  stand- 
point of  public  policy,  I  may  properly  add  the  following  tribute  to 
the  good  work  of  life-insurance  agents  in  general  by  the  late 
Rev.  Phillips  Brooks  : — 

One  of  the  greatest  blessings  of  the  vocation  of  Insurance  agents  is 
that  they  eliminate  a  great  deal  of  the  worry  of  life  ;  they  rid  men  of  a 
great  many  of  those  distressing  and  carking  troubles  that  keep  them  from 
living  their  true  lives.  *  *  *  *  I  fancy  there  is  no  profession  that 
profits  so  much  by  the  great  work  that  life-insurance  agents  are  constantly 
doing  as  the  profession  of  the  ministry.  By  it  they  are  set  free  to  do  what 
they  are  commissioned  to  do,  careless  how  long  life  is  going  to  last,  sure 
that  God  will  care  for  those  they  love,  because  in  His  Providence  He  has 
led  men  to  organize  this  great  interest  of  life  insurance  for  their  protection. 

What  Bishop  Brooks  said  of  life-insurance  agents  in  general 
applies  with  special  force  to  the  daily  labor  of  the  vast  army  of 
Industrial  agents,  carrying  into  the  homes  of  the  industrial  mil- 
lions the  teachings  of  a  quarter  of  a  century  of  insurance  efforts 


264  HISTORY   OF  THE   PRUDENTIAL. 

and  results,  and  completely  fulfilling  Mr.  Dryden's  early  ambi- 
tion, to  make  a  success  of  Industrial  insurance  in  America  along 
the  same  lines  which  made  possible  the  gigantic  success  of  Sir 
Henry  Harben's  scheme  in  his  half -century  management  of  The 
Prudential  Assurance  Company  of  London. 

I  have  purposely  refrained  in  this  work  from  making  more 
than  incidental  mention  of  the  large  number  of  letters  of  thanks 
and  appreciation  which  constantly  reach  the  Company  from  bene- 
ficiaries under  Industrial  policies,  but  I  here  include  a  short  letter 
which  is  so  full  of  pathos  and  indicates  so  clearly  the  beneficent 
mission  of  Industrial  insurance,  that  I  reproduce  the  same  in  full 
as  quoted  in  The  Prudential  Weekly  Record  of  October  17,  1898  :— 

PHILADELPHIA,  PA.,  September  27,  1898. 
To  JOHN  F.  DRYDEN,  ESQ. 

Dear  Sir: — I  would  state  that  I  have  received  the  money  on  policy 
662,025,  being  $187.95.  I  was  very  much  pleased  at  your  promptness  in 
settling  up  my  claim,  as  I  was  in  need  of  money  to  bury  my  wife,  and 
without  that  assistance  the  county  would  have  had  to  bury  her,  as  I  have 
been  out  of  employment  for  months,  and  I  can  assure  you,  Mr.  President, 
that  I  highly  appreciate  your  kindness  and  consider  your  institution  as  the 
real  "  Savings  Bank"  of  the  poor  people,  and  whenever  or  wherever  I 
can  say  a  good  word  for  it  I  will  do  so  with  pleasure. 

I  remain, 

Yours  very  respectfully, 

2012  South  Gratz  Street,  ROBERT  MACCLERMONT. 

36th  Ward,  Philadelphia. 

The  results  of  the  year  1898  had  been  exceedingly  satis- 
factory. In  the  Industrial  department  the  number  of  policies 
had  increased  to  2,924,526,  for  an  aggregate  amount  of  Indus- 
trial insurance  protection  of  $333,992,200.  In  the  Ordinary 
department,  under  the  new  system  of  making  each  representa- 
tive of  the  Industrial  also  a  representative  of  the  Ordinary 
department,  the  business  had  been  increased  to  71,927  policies 
for  an  aggregate  amount  of  $80,554,853  of  insurance  protec- 
tion. Corresponding  increase  had  been  made  in  the  assets  and 
surplus  of  the  Company,  while  the  total  annual  payments  to 
policy-holders  during  the  year  reached  the  colossal  sum  of 
$5,389,403.  The  actual  premium  income  of  the  Company  from 
both  the  Industrial  and  Ordinary  business  exceeded  $i 6,000,00x3, 
while  the  total  income,  including  interest,  etc.,  was  $17,481,876. 


THE  PRUDENTIAL  INS.  CO.  OF  AMERICA,  l897~'98.      265 

The  results  of  the  year's  business  operations  had  therefore  been 
very  gratifying  and  had  proven  a  most  emphatic  public  endorse- 
ment of  the  Company's  conservative  policy  of  a  prudent  liberality 
in  dealing  with  its  policy-holders  in  its  own  way  according  to  the 
light  of  its  own  experience. 

In  his  annual  letter  to  the  field  force  for  the  year  1899,  Mr. 
Pryden,  under  date  of  January  i,  1899,  commented  upon  the 
excellent  record  made  during  the  preceding  year,  and,  in  words 
which  are  deserving  of  being  reproduced,  once  more  empha- 
sized the  importance  of  reducing  the  lapse-rate  :  ' '  The  Company 
desires  and  is  striving  to  keep  the  lapses  down  to  the  minimum, 
and  everything  within  the  rules  of  the  Company  must  be  done 
to  keep  the  membership  intact.  When  it  is  finally  decided  that 
premiums  can  not  be  collected,  see  that  Paid-up  Policies  (if  the 
insured  are  entitled  thereto)  are  applied  for."  Thus  the  Com- 
pany's interest  in  its  policy-holders  is  made  manifest  by  its 
rules,  under  which  agents  are  not  only  required  to  put  forward 
every  effort  to  keep  policies  in  force,  but  in  cases  where  the 
lapse  of  the  policy  is  inevitable  special  efforts  must  be  made  to 
protect  the  interests  of  the  insured,  and  it  may  be  said,  with 
all  the  emphasis  which  it  is  possible  to  put  into  words,  that  not 
a  single  policy  has  ever  lapsed  which,  as  far  as  it  was  within 
the  power  of  the  Company,  would  not  be  on  its  books  to-day, 
had  advantage  been  taken  of  the  exceptional  opportunities  given 
for  revival  or  reinstatement.  With  special  reference  to  paid-up 
policies,  the  President  stated  in  his  letter  that — "The  number 
of  Paid-up  Policies  in  force  upon  our  books  is  now  82,984, 
covering  insurance  for  $3,690,205.  The  number  issued  during 
1898  was  33,619,  representing  insurance  for  $1,670,360."  In 
commenting  upon  the  exceptional  record  made  in  the  Ordi- 
nary department,  in  which  there  had  been  a  net  increase  of 
$21,000,000  in  the  insurance  in  force,  the  President  paid  the 
following  graceful  tribute  to  the  field  force  :  '  *  These  facts  and 
figures  tell  of  the  steady  and  permanent  devotion  and  loyalty  to  the 
Company' s  interests,  on  the  part  of  the  field  staff,  that  we  have  long 
maintained  can  not  be  paralleled  by  any  other  company  " 


266  HISTORY  OF  THE   PRUDENTIAL. 


CHAPTER  XV. 

THE  PRUDENTIAL   INSURANCE   COMPANY  OF  AMERICA,   1899. 

By  January  i,  1899,  The  Prudential  had  achieved  results 
which  are  practically  without  a  parallel  in  the  history  of  American 
life  insurance.  The  experiment  commenced  in  1875  had  been 
developed  into  a  success  of  gigantic  proportions.  Where  once 
there  had  been  a  question  of  doubt,  where  once  the  voice  of 
pessimism  had  been  ready  to  decry  this  early  effort  to  extend  the 
principles  of  genuine  life  insurance  to  the  masses,  every  compe- 
tent critic  and  financial  authority  now  readily  conceded  to  the 
founders  of  Industrial  insurance  the  foremost  position  in  the  life 
insurance  world.  Among  others  the  Insurance  Monitor,  in  a  brief 
reference  to  the  results  achieved  by  The  Prudential  during  1898, 
related  the  following  instance  of  well-deserved  approval :  ' '  We 
heard  some  high  praise  of  the  Prudential  officers  the  other  day, 
from  one  of  the  leading  lights  in  life  insurance.  The  officers  of 
The  Prudential  have  long  realized  that  Industrial  insurance  must 
be  conducted  in  the  interest  of  the  masses,  and  any  action  which 
would  seem  to  them  likely  to  be  construed  otherwise  would  be 
pretty  sure  to  meet  with  their  disfavor.  It  was  the  personal 
appeals  and  arguments  of  President  Dryden  to  the  industrial 
classes,  for  their  own  interest,  that  laid  the  foundations  of  the 
business  in  this  country.  He  is  studying  that  interest  to-day. ' ' 
To  these  remarks  I  add  an  extract  from  the  Camden  Daily 
Telegram  of  January  27,  1899  : — 

The  twenty- third  annual  statement  of  the  Company,  issued  the  first  of 
this  year,  gives  to  its  policy-holders  in  a  concise,  business  way,  a  clear 
insight  into  its  present  and  remarkable  continued  healthy  growth.  The  in- 
vestments are  wisely  and  prudently  made  by  experienced,  able  and  honest 
financiers,  who  give  their  undivided  time  and  abilities  to  the  interests  of 
the  Company,  at  the  head  of  which  stands  the  President,  John  F.  Dryden. 
Though  at  the  head  of  an  efficient  staff  which  renders  him  such  valuable 
support,  yet  much  of  the  unprecedented  success  of  The  Prudential  is  due 
to  the  hard  work,  rare  financial  qualifications  and  sagacity  of  its  President, 


THE   PRUDENTIAL  INS.    CO.    OF  AMERICA,    1899. 

who  has  perfected  its  organization  until  it  is  now  like  a  completed  machine, 
independent  of  the  direction  of  a  single  head  for  its  future  smooth  running. 
Such  has  been  Mr.  Dryden's  great  ambition,  and,  while  he  has  lived  to  see 
its  fruition,  there  is  every  prospect  that  he  may  enjoy  it  for  many  years 
to  come. 

The  people  of  New  Jersey  are  justly  proud  of  the  fact  that  this  great 
institution  was  founded  in  their  State,  though  its  business  has  so  long  since 
outgrown  the  confines  of  any  specified  locality  or  country.  The  home 
office  in  Newark  legally  designates  it  as  a  New  Jersey  corporation,  while  as 
a  taxpayer  it  is  one  of  the  largest  contributors  to  the  State  Treasury,  and 
outside  of  railroads  the  largest,  its  assessment  last  year,  promptly  paid, 
being  no  less  than  $96,980.42.  This  sum  does  not  include  municipal  taxes, 
which  it  pays  direct  to  Newark. 

It  is  but  proper  that  mention  should  be  made  here  of  a  factor 
of  not  inconsiderable  importance  in  making  for  the  great  success 
of  The  Prudential  in  the  Ordinary  department.  Sometime  during 
1896  The  Prudential  Company  commenced  the  use  of  a  striking 
advertisement  in  the  nature  of  a  reproduction  of  the  Rock  of 
Gibraltar,  across  the  face  of  which,  in  bold  letters,  appeared 
the  motto— "The  Prudential  has  the  strength  of  Gibraltar." 
This  advertisement  is  to-day  considered  the  most  striking  one  of 
its  kind,  and  by  this  means  the  name  of  the  Company  has  become 
more  than  ever  a  household  word  throughout  the  entire  country. 
By  a  curious  coincidence  this  advertisement  proved  the  fulfill- 
ment of  a  singular  prophecy  already  referred  to  in  the  earlier 
part  of  this  work.*  The  Newark  Morning  Register  of  Novem- 
ber 13,  1875,  concluded  an  editorial  on  the  new  aspirant  for  life- 
insurance  honors  in  America  with  the  statement  that  ' '  The 
Society  may  be  said  to  be  founded  upon  a  rock. ' '  It  was  pointed 
out  in  The  Prudential  Weekly  Record  of  July  31,  1899,  that  it 
was  no  longer  the  whole  truth  that  the  Company  ' '  may  be  said 
to  be  founded  upon  a  rock,"  "  for  there  is  now  no  may  be  about 
it.  It  is  now  an  established  fact,  one  that  is  not  only  unques- 
tioned, but  absolutely  unquestionable,  that  The  Prudential  is 
'founded  upon  a  rock,'  and  stands  to-day,  in  its  way,  equally 
a  synonym  and  symbol  of  strength  and  impregnability  with 
the  renowned  stronghold  that,  a  little  more  than  a  century  ago, 
successfully  resisted  a  four  years'  siege."  It  will  be  granted, 
I  believe,  that  seldom  has  an  advertisement  so  completely 

*  Ante,  p.  58. 


268  HISTORY   OF   THE   PRUDENTIAL. 

represented  a  business  organization  and  its  past  history  in  so 
concise  a  phrase  as  ' '  The  Prudential  has  the  strength  of 
Gibraltar,"  for  of  few  companies  or  business  organizations  can 
it  be  said,  in  the  light  of  the  history  which  is  here  given  in  as 
much  detail  as  limited  space  will  permit,  that  it  was  built  on 
solid  foundations,  and  with  the  fixed  determination  that  on  such 
foundations  a  structure  should  be  reared  which  should  stand 
antagonism,  opposition,  the  most  fierce  competition,  and  the 
inevitable  changes  of  time.  Whik  perhaps  a  quarter  of  a  cent- 
ury is  too  short  a  period  to  demonstrate  the  permanency  of  such 
an  institution  as  The  Prudential,  it  must  not  be  forgotten  that, 
aside  from  its  financial  security  and  foundation  on  correct  prin- 
ciples of  finance  and  the  law  of  mortality,  the  Company  rests 
equally  secure  in  the  affection  and  regard  of  more  than  three  and 
a  half  millions  of  loyal  policy-holders,  and  almost  15,000  em- 
ployees whose  steady  and  permanent  devotion  and  loyalty  to  the 
Company's  interests,  in  the  words  of  Mr.  Dryden,  "cannot  be 
paralleled  by  any  other  company." 

As  an  illustration  of  the  continued  increase  in  the  popularity 
of  the  Company,  mention  must  be  made  of  a  very  important  trans- 
action that  occurred  during  the  latter  part  of  the  month  of  De- 
cember, 1898,  and  to  which  extended  reference  was  made  in  The 
Prudential  Weekly  Record  Q!  January  2,  1899.  The  firm  of  Mont- 
gomery Ward  &  Co.,  of  Chicago,  had  effected  an  arrangement 
with  the  Company  by  which  whole-life  policies  were  written  upon 
the  lives  of  150  of  the  married  employees  of  the  firm.  The  poli- 
cies were  presented  as  a  Christmas  gift,  one  year's  premium  having 
been  paid  thereon  in  full.  In  referring  to  this  transaction,  The 
Prudential  Weekly  Record  stated  that  ''The  firm  selected  the 
regular  policies  issued  by  The  Prudential  as  the  best  they  could 
find  in  the  market  for  the  purpose  desired.  In  a  letter  of  presen- 
tation accompanying  each  policy  the  firm  said  :  'As  to  the  Com- 
pany and  plan,  we  selected  The  Prudential  because  of  its  strong 
financial  standing,  coupled  with  the  great  liberality  of  its  policy 
contract,  with  its  incontestability,  loan  and  surrender  values, 
automatic  non-forfeiture,  etc.''  The  transaction  naturally 
attracted  considerable  attention,  and  must  be  classed  as  one  of 
the  important  events  in  life-insurance  history. 

Influenced,  no  doubt,  by  the  Montgomery  Ward  example, 
the  Ithaca  Daily  News,  during  the  latter  part  of  the  year, 


THE   PRUDENTIAL  INS.    CO.    OF   AMERICA,   1899.         269 

completed  an  arrangement  with  The  Prudential  for  insuring  its 
employees,  including  even  the  carrier-boys,  under  policies  in  the 
Industrial  department  of  the  Company,  all  the  premiums  being 
paid  for  a  period  of  some  months  by  the  newspaper,  thus  offering  a 
direct  incentive  to  its  employees  to  make  an  insurance  provision 
against  death  and  other  contingencies,  on  the  Industrial  plan. 

A  determined  effort  was  made  this  year  to  increase  the 
efficiency  of  the  field  force  by  improved  methods  of  ' '  straight 
canvassing,"  and  special  straight  canvassing  agencies  were 
established  independent  of  the  regular  local  offices,  with  an 
exceptional  degree  of  success.  In  referring  to  the  subject  under 
date  of  March  I3th,  the  Vice-President,  in  direct  charge  of  the 
vast  field  operations,  addressed  the  superintendents  in  a  letter, 
from  which  I  make  a  few  abstracts  : — 

In  order  that  you  may  thoroughly  understand  what  we  mean  by  the 
term  A  Straight  Canvassing  Superintendent,  Assistant  or  Agent,  we  would 
state  that  each  should  start  absolutely  without  debit*  and  receive  no 
transfers  whatever. 

We  propose  to  appoint  Superintendents  without  debits  in  every  locality 
where  we  think  the  conditions  warrant  it,  providing  suitable  men  are 
available. 

If  a  Superintendent  feels  that  he  cannot  make  a  success  of  this  feature 
of  the  business,  we  advise  him  not  to  undertake  it ;  but  we  have  already 
demonstrated  in  a  number  of  cases  that  Superintendents,  Assistants  and 
Agents  can  succeed  under  the  conditions  set  forth. 

This  letter  was  supplemented  by  another  communication, 
dated  March  3ist,  in  which  the  question  of  agency  compensation 
under  the  new  arrangement  was  dealt  with  in  detail.  I  quote 


*  The  term  "  debit "  is  applied  to  the  total  amount  of  weekly  collect- 
ible premiums  charged  against  an  agent  and  for  which  the  latter  is  respon- 
sible. A  "  debit "  is  determined  by  deducting  from  the  premiums  of  the 
total  number  of  policies  issued  or  transferred  to  an  agent  the  premiums  of 
the  policies  terminated  by  reason  of  lapse,  transfer  or  death.  If,  for  ex- 
ample, $80.00  of  weekly  collectible  premiums  have  been  issued  to  the  agent 
and  $12.50  have  been  terminated  for  some  reason  or  other,  the  agent's 
''debit "  would  be  $67.50.  This  amount  of  premiums  the  agent  is  expected 
to  collect  and  in  return  he  is  paid  a  commission  of  15  per  cent.,  which  is 
termed  "ordinary  salary."  In  a  general  way  it  may  be  said  that  the 
average  collection  will  reach  from  98  to  99  per  cent,  of  the  weekly  collect- 
ible debit,  while  the  average  debit  is  approximately  fifty  dollars. 


270  HISTORY  OF  THE   PRUDENTIAL. 

from  the  letter  of   the  Vice- President  a  few  passages  of  more 
than  passing  interest  and  importance  : — 

The  magnificent  support  which  has  been  given  this  movement  through- 
out the  Field,  and  the  well-known  ability  of  our  Staff  to  produce  new  busi- 
ness of  the  highest  grade,  encourages  us  to  believe  that  no  interests  will  be 
jeopardized  and  no  dangers  met  with  if  we  extend  to  Superintendents  with 
debits,  as  well  as  to  those  without,  the  privilege  of  making  advances,  when 
necessary,  to  new  Agents  during  those  first  weeks  of  their  service  when  no 
special  salary  can  be  regularly  received.  * 

Advances  are  to  be  made  only  to  new  Agents,  and  only  when  in  the 
judgment  of  the  Superintendent  they  are  necessary  to  secure  the  services 
of  permanent  and  reliable  men. 

A  satisfactory  amount  of  new  business,  known  by  the  Superintendent 
to  be  of  good  quality,  must  be  in  hand  before  an  advance  is  allowed. 

No  advance  is  to  be  made  after  the  time  when  special  salary  could  have 
been  received  in  the  regular  course. 

The  Agent  must,  in  every  case,  be  made  to  understand  that  the  advance 
is  in  the  nature  of  a  loan,  to  be  repaid  by  him  as  soon  as  he  makes  regular 
earnings. 


It  will  be  observed,  on  close  examination  of  these  extracts, 
that  the  Company's  interests  were  well  protected,  while  at  the 
same  time  new  agents,  engaged  at  first  in  a  rather  difficult  field, 
were  encouraged  by  slight  advances,  sufficient  to  meet  living 
expenses,  until  by  their  own  efforts  they  had  succeeded  in  estab- 
lishing a  permanent  and  sufficient  income. 

The  careful  attention  given  to  every  detail  in  the  manage- 
ment of  the  field  force  of  The  Prudential  is  perhaps  nowhere 
better  set  forth  than  in  a  letter  from  Vice-President  Ward  to  a 
newly-appointed  superintendent  for  his  guidance  in  managing  the 
affairs  of  his  district.  The  letter  was  republished  in  The  Pruden- 
tial Weekly  Record  of  January  16,  1899,  and  the  following  extracts 
will  illustrate  the  Company's  interest  in  the  economic  and  efficient 
administration  of  its  district  offices  : — 

On  assuming  the  management  of  a  District  for  this  Company  you  should 
realize  that  the  responsibilities  of  your  position  are  of  considerable  mag- 
nitude. 

The  Prudential  desires  to  be  known  well  in  every  community  as  fair- 
dealing  and  liberal  in  its  treatment  of  policy-holders  and  others  connected 
with  it.  Let  it  be  your  constant  aim  to  do  right  and  to  see  that  those  under 
you  act  with  the  same  purpose — all  working  to  promote  and  advance  the 
reputation  of  the  Company  and  its  employees.  The  opinion  of  the  people 


THE  PRUDENTIAL  INS.    CO.    OF   AMERICA,   1899.         271 

who  know  The  Prudential  only  by  reputation  will  be  influenced  favorably 
or  adversely  according  as  the  local  office  is  managed. 

Your  position  as  Superintendent  entitles  you,  in  a  business  way  at  least, 
to  an  acquaintance  with  the  most  influential  residents,  and  you  should 
deport  yourself  in  a  manner  that  will  command  the  respect  and  confidence 
of  the  community  at  once  and  only  employ  those  who  will  measure  up  to 
the  same  standard. 

Instruct  your  force  never,  under  the  penalty  of  immediate  dismissal,  to 
misrepresent  a  contract.  Have  the  Company's  rules  strictly  enforced. 
Examine  the  agents'  collection  books  frequently,  and  see  that  policies  are 
lapsed  under  the  four  weeks'  rule.  Retain  every  good  or  promising  agent 
if  possible — ' '  finals  ' '  mean  lapses.  Insist  on  Straight  Canvassing.  Encour- 
age each  man  to  write  Ordinary  and  to  make  the  attempt  to  get  Annual 
Premiums. 

Select  for  Agents  men  who  are  thoroughly  respectable  and  possessed 
of  the  qualities  which  make  for  success — honest,  earnest,  industrious  and 
sober  men.  Get  good  material  to  work  upon,  and  then  spare  no  pains  in 
the  development.  If  you  begin  aright,  the  after- work  is  much  easier.  Do 
not  let  an  Agent  go  for  want  of  a  little  time  and  care.  Remember  it  is  a 
part  of  your  duty  to  make  Agents  and  Assistants  successful. 

We  shall  personally  watch  your  record  with  a  great  deal  of  interest,  and 
give  you  all  the  time  and  opportunity  we  think  necessary  to  insure  your 
continuance  as  a  Superintendent.  The  fact  of  our  placing  a  District  in  your 
hands  shows  our  confidence  in  your  ability  and  integrity,  and  you  have  our 
best  wishes  for  success. 

The  truly  national  character  of  The  Prudential  was  once 
more  illustrated  in  the  great  fire  which  destroyed  the  Hotel 
Windsor  in  New  York  City  on  March  17,  1899.  There  were 
found,  four  days  after  the  fire,  wrapped  up  in  an  old  shawl  with 
a  bank-book,  two  Prudential  policies  on  the  lives  of  persons  living 
in  the  hotel.  The  incident  is  referred  to  in  The  Prudential 
Weekly  Record  of  April  loth,  in  which  also  a  reproduction  of  the 
half -charred  policies  is  given,  together  with  the  following  com- 
ments : — 

Investigation  by  Prudential  representatives  discovered,  happily,  that 
the  two  persons  named  were  not  among  the  lost,  but  are  still  alive  ;  also  the 
following  facts : — 

Both  women  are  married.  Mrs.  McDonald  was  in  the  employ  of  the 
hotel.  Her  sister,  Mrs.  White,  is  in  Europe,  and  had  left  her  policy  in  care 
of  her  sister.  Together  with  Mrs.  McDonald's  effects,  including  her  policy, 
her  bank-book  and  $600  in  cash,  Mrs.  White's  policy  was  placed  in  her  sis- 
ter's trunk.  The  latter  was  destroyed,  also  the  money,  all  that  remained 
being  the  bank-book,  policies  and  the  brass  padlock  of  the  trunk.  Mrs. 
McDonald  was  on  the  fourth  floor  of  the  hotel  when  the  fire  broke  out,  but 
escaped. 


2/2  HISTORY  OF  THE  PRUDENTIAL. 

This  connection  of  ours  with  an  occurrence  that  has  shocked  and  horri- 
fied the  whole  country  again  calls  to  mind  the  all-embracing  and  truly 
national  character  of  The  Prudential.  No  great  fire,  explosion,  railroad 
accident  or  other  mishap  or  disaster  involving  large  loss  of  life  can  now 
occur  in  which  this  Company  is  not  somehow  concerned,  and  generally 
as  a  ready  helper  in  time  of  sorest  need. 

Another  policy-holder  of  the  Company  living  at  the  time  in 
the  hotel  also  fortunately  made  her  escape  without  serious  injury. 

Mention  has  been  made,  in  an  earlier  part  of  this  work,  of 
the  passage  of  a  law  in  the  State  of  Colorado  in  1893,  prohibiting 
the  insurance  of  minors  under  the  age  of  ten  years.  In  com- 
pliance with  a  strong  local  demand  for  the  repeal  of  this  law, 
officially  voiced  by  the  Insurance  Commissioner,  a  determined 
effort  was  made  this  year  to  repeal  the  law  of  1893,  an(l  enact  in 
its  place  a  regulating  statute  practically  identical  with  a  similar 
law  an  force  in  the  State  of  New  York  and  the  Province  of 
Ontario.  With  this  object  in  view,  House  Bill  No.  317,  a  copy 
of  which  is  given  below,  was  introduced  into  the  Colorado  Legis- 
lature by  Mr.  Arthur  Bartels,  of  Denver  : — 

BILL  REGULATING  THE  INSURANCE  OF  MINORS. 

SECTION  i.  Any  person  liable  for  the  support  of  a  child  of  the  age  of 
one  year  and  upward  may  take  a  yearly  renewable  term  policy  of  insurance 
thereon,  the  amount  payable  under  which  may  be  made  to  increase  with 
advancing  age  and  which  shall  not  exceed  the  sums  specified  in  the  follow- 
ing table,  the  ages  therein  specified  being  the  age  at  time  of  death,  and 
which,  after  the  age  of  thirteen,  may  become  an  ordinary  life  policy  for  an 
amount  not  exceeding  the  sum  specified  in  the  table : — 

Between  the  ages  of  one  and  two  years,  thirty  dollars. 

Between  the  ages  of  two  and  three  years,  thirty-four  dollars. 

Between  the  ages  of  three  and  four  years,  forty  dollars. 

Between  the  ages  of  four  and  five  years,  forty-eight  dollars. 

Between  the  ages  of  five  and  six  years,  fifty-eight  dollars. 

Between  the  ages  of  six  and  seven  years,  one  hundred  and  forty  dollars. 

Between  the  ages  of  seven  and  eight  years,  one  hundred  and  sixty- 
eight  dollars. 

Between  the  ages  of  eight  and  nine  years,  two  hundred  dollars. 

Between  the  ages  of  nine  and  ten  years,  two  hundred  and  forty  dollars. 

Between  the  ages  of  ten  and  eleven  years,  three  hundred  dollars. 

Between  the  ages  of  eleven  and  twelve  years,  three  hundred  and  eighty 
dollars. 

Between  the  ages  of  twelve  and  thirteen  years,  four  hundred  and  sixty 
dollars. 


THE  PRUDENTIAL  INS.    CO.   OF  AMERICA,    1899.         273 

Between  the  ages  of  thirteen  and  sixteen  years,  five  hundred  and  twenty 
dollars. 

Between  the  ages  of  sixteen  and  seventeen  years,  six  hundred  and 
twelve  dollars. 

Between  the  ages  of  seventeen  and  eighteen  years,  seven  hundred  dollars. 

Between  the  ages  of  eighteen  and  nineteen  years,  seven  hundred  and 
eighty-four  dollars. 

Between  the  ages  of  nineteen  and  twenty  years,  eight  hundred  and 
fifty -five  dollars. 

Between  the  ages  of  twenty  and  twenty-one  years,  nine  hundred  and 
thirty  dollars. 

SECTION  2.  All  acts  and  parts  of  acts  in  conflict  herewith  are  hereby 
repealed. 

SECTION  3.  In  the  opinion  of  the  General  Assembly  an  emergency 
exists  ;  therefore,  this  act  shall  take  effect  and  be  in  force  from  and  after  its 
passage. 

It  will  be  observed,  on  examination  of  this  bill,  that  ade- 
quate provision  was  made  against  speculative  insurance  of  any 
kind,  either  on  the  part  of  Industrial  or  Ordinary  companies  ; 
that  the  bill  covered  all  ages  under  twenty-one,  and  permitted 
at  the  younger  ages  insurance  for  amounts  just  about  sufficient 
to  meet  funeral  expenses  and  the  cost  of  the  last  illness.  The  bill 
had  the  approval  of  the  Superintendent  of  Insurance,  the  Hon. 
H.  H.  Eddy,  who  had  taken  pains  to  secure  information  and  data 
with  reference  to  the  transaction  of  this  form  of  insurance  in 
other  States  of  the  Union.  A  circular  letter  had  been  addressed 
by  Mr.  Kddy  to  the  Insurance  Commissioners  of  leading  States, 
stating  that — 

I  would  esteem  it  a  very  great  favor  if  you  would  kindly  advise  me  as 
to  the  results  of  the  prosecution  of  this  kind  of  insurance  [Industrial]  in 
your  State,  and  whether,  in  your  judgment,  the  repeal  of  the  present  pro- 
hibitive law  and  the  enactment  of  a  permissive  law,  with  proper  restrictions 
placed  upon  and  proper  regulation  of  the  insurance  companies  provided  for, 
would  be  a  benefit  to  the  community  at  large,  or  otherwise. 

In  reply  to  Mr.  Kddy's  letter,  the  Insurance  Commissioner 
of  New  Jersey,  the  Hon.  Wm.  Bettle,  said  : — 

As  you  are  doubtless  aware,  industrial  insurance,  on  the  lives  of  both 
adults  and  infants,  has  been  prosecuted  in  this  State  for  many  years,  and 
has  attained  a  volume  as  large  perhaps,  if  not  larger,  in  proportion  to 
population,  than  any  other  State  in  the  Union,  and  this  Department  has 
yet  to  receive  the  first  charge  or  complaint  that  the  insurance  of  children 
under  ten  years  of  age  was  productive  of  infanticide.  I  have  long  since 


274  HISTORY   OF  THE   PRUDENTIAL. 

rejected  the  assertion  as  entirely  unfounded  and  unjustifiable.  The  benefi- 
cence and  value  of  this  kind  of  insurance  have  been  demonstrated  beyond 
question,  and  there  can  be  no  doubt  that  the  repeal  of  the  present  statute  of 
your  State  prohibiting  the  insurance  of  children  under  ten  years  of  age,  and 
the  enactment  of  a  law  permitting  this  to  be  done,  with  proper  restrictions 
upon  and  regulation  of  the  companies  transacting  it,  would  be  a  great  benefit 
to  its  people. 

The  reply  from  the  Insurance  Superintendent  of  New  York 
was  as  follows  : — 

The  recognition  given  insurance  of  this  character  is  contained  in  section 
55  of  our  insurance  law,  chapter  690,  laws  of  1892. 

This  Department  has  never  had  any  cause  to  criticise  the  provisions 
of  this  section  of  the  law.  I  note  your  statement  that  the  principal  argu- 
ment which  has  been  used  against  the  passage  of  such  a  law  in  your  State 
is  that  it  would  be  productive  of  infanticide  for  the  purpose  of  obtaining 
the  insurance.  I  am  of  the  opinion  that  this  is  a  very  poor  argument,  and 
certainly  the  records  of  insurance  corporations  carrying  on  business  of 
this  character  will  not  bear  out  any  such  statement. 

A  likewise  favorable  reply  was  received  from  the  Insurance 
Superintendent  of  Illinois  :— 

No  evidence  has  been  presented  to  this  Department,  and  I  am  not 
aware  that  any  exists,  that  this  character  of  insurance  has  resulted  in 
increasing,  or  has  been  productive  of  infanticide.  I  believe  that  the 
experience  of  the  companies  who  do  this  kind  of  business  has  demonstrated 
that  under  proper  restrictions  it  is  a  benefit  both  to  the  parents  of  children 
who  are  insured,  who  are  usually  in  poor  circumstances,  and  likewise  and 
in  consequence  a  benefit  to  the  community  at  large.  Since  my  incum- 
bency in  the  office  of  Superintendent  of  Insurance,  no  complaints  have  been 
made  of  the  evil  effects  of  this  insurance,  or  of  any  wrongful  practices 
peculiar  to  this  character  of  insurance. 

From  Ohio,  where  a  vast  amount  of  Industrial  insurance 
has  been  transacted  for  many  years,  the  official  opinion  on  the 
part  of  the  State  Superintendent  of  Insurance  was  expressed  in 
the  following  words  : — 

Industrial  insurance  has  been  written  in  Ohio  for  several  j^ears,  and  so 
far  we  have  never  had  any  complaints  from  any  sources  showing  that  there 
has  been  any  criminal  or  immoral  effects  arising  from  it.  My  opinion 
is  that  no  such  effects  come  from  the  business. 

From  the  State  of  Massachusetts,  where  a  few  years  before 
a  considerable  agitation  had  resulted  in  an  official  investigation  of 


THE   PRUDENTIAL  INS.   CO.    OF   AMERICA,    1899.         275 

the  entire  subject,  the  Deputy  Insurance  Commissioner  replied  as 
follows  : — 

The  business  has  been  almost  wholly  confined  to  the  operations  of  the 
three  large  companies  which  have  made  a  specialty  of  it,  and  the  popular 
verdict  upon  its  results  has  been  one  of  full  approval  and  commendation. 

The  industrial  companies  have  had  to  struggle  against  prejudice,  igno- 
rance, jealousy  and  a  thousand  impediments  that  inevitably  attend  the 
promotion  and  building  up  of  a  new  system,  until  its  usefulness  and  value 
have  asserted  themselves  and  vindicated  its  adoption.  Its  progress  has 
been  steady  and  aggressive,  until  now  probably  not  less  than  ten  millions  of 
lives  are  insured  under  it  in  this  country,  while  in  England  probably  one- 
half  of  the  entire  population  are  included  in  similar  institutions  there. 

Very  many  inquiries  and  investigations  have  from  time  to  time  been 
instituted,  and  very  thorough  and  searching  examinations  have  been  had. 
The  most  important  of  these  and  of  greatest  length  and  breadth  of  inquiry 
were  in  the  Commons  House  of  Parliament  of  Great  Britain,  and  by  the 
General  Court  of  Massachusetts  in  1895.  The  verdict  in  both  cases  was  a 
practically  unanimous  approval  of  the  plans  of  the  companies,  the  vote  in 
the  Massachusetts  House  being  149  to  23. 

The  system  of  industrial  insurance  can  be  successfully  carried  on 
only  in  cities  or  thickly  settled  communities  of  mechanical  or  indus- 
trial operatives,  where  the  collection  of  the  small  weekly  premiums  can  be 
quickly  and  economically  made.  It  -is,  if  not  essentially,  at  least  very 
largely,  family  insurance,  and  if  the  insurance  of  the  children  at  the  same 
time  with  the  parents  is  not  permitted  a  very  great  part  of  its  attractive- 
ness and  value  would  be  lost. 

A  similar  reply  was  received  from  the  State  of  Pennsylvania, 
where  also  more  or  less  agitation  had  led  to  numerous  attempts 
at  adverse  legislation  : — 

The  claim  that  the  insurance  of  children  at  an  early  age  is  productive 
of  infanticide  for  the  purpose  of  obtaining  the  insurance  is  entirely  falla- 
cious, the  amount  of  the  policy  in  the  case  of  a  child  under  ten  years  being 
so  small  that  'the  temptation  to  commit  a  crime  of  that  sort  is  almost 
entirely  eliminated. 

The  Insurance  Commissioner  of  Connecticut  stated  that — 

/  believe  it  is  a  benefit  to  any  State,  and  I  believe  that  the  companies 
themselves  are  trying  to  prosecute  the  business  to  treat  the  policy-holders 
fairly,  and  to  pay  their  claims  promptly. 

This  kind  of  insurance  has  been  conducted  across  the  water  successfully, 
and  it  is  now  increasing  rapidly  in  this  country.  /  believe  that  every  State 
ought  to  open  its  doors,  with  such  restrictions  as  they,  might  deem  best,  to 
allow  this  business  to  be  transacted.  It  is  legitimate,  it  has  done  a  great 
good  to  the  community  and  has  benefited  and  is  benefiting  thousands. 


276  HISTORY  OF  THE   PRUDENTIAL. 

Summing  up  the  results  of  his  investigation,  Mr.  Eddy  ex- 
pressed himself  forcibly  on  the  subject  as  follows  : — 

As  to  the  Insurance  Department  of  Colorado,  I  may  say  that  it  has 
again  and  again  recommended  the  repeal  of  the  law  of  1893,  which  abso- 
lutely prohibits  the  insurance  of  minors  under  ten  years  of  age,  and  favored 
the  enactment,  in  lieu  thereof,  of  a  regulating  statute,  similar  to  that  which 
obtains  in  other  States  of  the  Union,  being  an  exact  copy  as  to  detail  of  the 
statute  now  in  force  in  the  State  of  New  York  and  the  Province  of  Ontario. 

The  department  is  in  possession  6f  no  facts,  nor  have  any  come  to  my 
personal  knowledge,  tending  to  show  that  the  insurance  of  minors  is  not 
in  every  sense  as  legitimate,  as  beneficial  or  as  necessary  as  the  insurance 
of  adults. 

It  will  be  observed,  on  careful  reading  of  the  preceding 
extracts,  that  without  exception  the  Insurance  Commissioners  of 
the  principal  States  of  the  Union  in  which  Industrial  insurance 
had  been  conducted  for  many  years  were  strongly  in  favor  of  the 
insurance  of  children  for  small  amounts,  and  this  view,  as  has 
been  pointed  out,  was  based  on  careful  personal  investigation  and 
the  records  of  the  departments  officially  in  charge  of  the  insur- 
ance interests  of  the  different  States.  The  passage  of  the  bill 
was  from  the  outset  bitterly  opposed  by  a  few  members,  including 
the  Secretary  of  the  Colorado  Humane  Society,  the  same  body 
which  in  1893  had  succeeded  in  placing  the  prohibitive  law  on 
the  statute-book.  A  strong  effort  was  made  by  the  Society  to 
create  a  sentiment  adverse  to  the  passage  of  the  law,  especially 
among  kindred  societies.  The  subject  being  practically  unknown 
to  a  large  number  of  people  outside  of  the  industrial  population, 
it  became  necessary  to  disseminate  information  pertaining  to  the 
subject  of  Industrial  insurance,  but  within  a  short  time  after  the 
opposition  manifested  itself  some  of  the  leading  and  most  respected 
citizens  of  the  State  came  forward  with  emphatic  statements  of 
their  views  in  favor  of  the  passage  of  the  bill  and  the  repeal  of 
the  law  of  1893.  Among  others,  Mrs.  Sarah  S.  Platt,  President 
of  the  State  Board  of  Charities  and  President  of  the  Women's 
Club  of  the  State  of  Colorado,  in  an  open  letter  under  date  of 
February  20,  1899,  expressed  herself  as  follows  : — 

In  my  charity  work  in  Holyoke,  Mass.,  where  the  majority  of  the  peo- 
ple are  factory  workers  and  where  large  numbers  are  insured  on  this  plan, 
I  had  often  occasion  to  meet  with  the  good  results  of  this  form  of  saving.  I 
met  with  abundant  proof  that  by  this  method  of  insurance  much  misery  was 


THE   PRUDENTIAL  INS.    CO.    OF   AMERICA,    1899.         277 

directly  prevented  in  that  the  people  were  placed  above  the  need  of  public 
support  to  bury  their  dead ;  but  furthermore,  in  that  much  good  was  done 
in  an  indirect  manner  by  teaching  the  working  people  systematic  habits  of 
saving  in  other  directions.  Although  I  have  seen  much  of  the  actual  work- 
ings of  this  method  of  family  insurance,  I  have  never  met  with  an  instance 
where  harm  was  likely  to  result,  and  for  these  reasons,  and  as  the  result  of 
my  personal  knowledge,  I  agree  that  the  prohibitory  law  of  1893  should  be 
repealed  and  be  replaced  by  a  regulating  statute  such  as  is  in  force  in 
other  States. 

The  Rev.  Edward  Pearsons  Newton,  President  of  the  Asso- 
ciated Charities  of  Pueblo,  Colo.,  also  dealt  with  the  subject  in 
an  open  letter  dated  February  i6th  : — 

For  years  my  interests  have  led  me  to  read  much  upon  social  and 
charitable  lines.  I  believe  Industrial  Insurance  makes  for  thrift  and  inde- 
pendence, and  these  are  above  all  things  to  be  fostered  among  the  poor.  I 
heartily  desire  its  introduction  among  the  wage-earners  of  Pueblo,  of  whom 
we  have  so  many. 

Among  others,  the  Rev.  Thos.  H.  Malone,  Editor  of  the 
Colorado  Catholic,  a  member  of  the  State  Board  of  Charities, 
and  one  of  the  foremost  of  the  Catholic  clergy  of  the  State, 
not  only  expressed  his  views  in  an  open  letter  dated  Feb- 
ruary 25th,  but  also  appeared  personally  before  the  Senate  In- 
surance Committee  in  favor  of  the  repeal  of  the  law  of  1893. 
From  his  letter  I  quote  the  following  extract : — 

I  have  given  the  matter  some  thought  and  consideration  with  special 
view  of  the  moral  aspects  of  the  whole  question,  and  in  the  absence  of  any 
facts  detrimental  to  this  method  of  insurance,  and  in  the  further  absence  of 
any  reasonable  theory  of  public  morals  as  opposed  to  it,  I  am  in  favor  of 
the  repeal  of  the  law  of  1893  and  the  enactment  of  a  regulating  statute, 
which  will  not  only  correct  a  former  injustice,  but  do  much  to  place  the 
business  as  a  whole  on  a  better  legal  foundation,  since  I  understand  that  the 
law  itself  has  been  declared  unconstitutional.  As  one  having  some  knowl- 
edge of  the  life  and  labor  of  the  working  people  of  this  State,  I  do  not 
hesitate  to  say  that  I  feel  satisfied  that  they  can  be  trusted  in  this  matter, 
and  that  they  should  not  be  deprived  of  the  liberty  to  place  a  small  insur- 
ance protection  on  the  lives  of  every  member  of  the  family  as  may  to  them 
seem  expedient  and  desirable. 

These  views  of  recognized  authorities  on  matters  relating 
to  public  welfare,  with  special  reference  to  the  administration  of 
public  charities,  are  supplemented  by  a  letter  addressed  to  State 
Senator  J.  C.  Evans,  in  reply  to  a  letter  of  inquiry  as  to  the 


278  HISTORY  OF  THE   PRUDENTIAL. 

insurance  of  minors  in  the  city  of  Boston.  During  the  agita- 
tion of  1895  in  the  State  of  Massachusetts,  when  an  attempt 
was  made  to  prohibit  the  insurance  of  children  under  ten  years 
of  age,  Mr.  Thos.  T.  Stokes,  Director  of  the  Associated  Charities 
of  Boston,  had  appeared  before  the  committee  of  the  Legislature 
and  had  expressed  himself  strongly  in  favor  of  the  insurance  of 
children.  Senator  Kvans  addressed  a  letter  to  Mr.  Stokes,  mak- 
ing inquiry  as  to  whether  subsequent  experience  had  been  such 
as  to  induce  him  to  change  his  views  in  regard  to  the  subject. 
In  reply  Mr.  Stokes  expressed  himself  as  follows  : — 

I  beg  to  say  that  my  ideas  are  the  same  as  when  I  was  quoted  before  a 
committee  of  our  "  General  Court."  I  believe  there  may  be  abuses,  but  to 
prevent  thousands  saving  because  a  few  may  spend  their  money  foolishly  is 
no  argument.  Then  again,  I  believe  in  thrift  and  to  try  and  encourage 
people  to  save.  I  firmly  believe  that  in  Massachusetts  there  has  never  been 
a  case  where  a  child  has  been  murdered  by  neglect,  or  quicker  means,  for 
the  insurance.  I  am  not  a  teetotaler,  but  when  money  goes  any  way  out  of 
the  saloon  it's  for  the  better  interests  of  the  public.  It's  said  undertakers 
are  most  interested  in  keeping  alive  child  insurance  ;  well,  the  poor  have 
feelings  as  the  rich  and  love  their  children,  why  should  they  not  take  pride 
in  having  a  respectable  funeral  ?  And  it's  better  to  be  prepared  than  when 
the  time  comes  to  be  burdened  by  a  load  of  debt.  The  good  people  who 
were,  and  are,  against  this  class  of  insurance  offer  no  suggestions,  and  are 
the  first  to  cry  out  about  "  the  improvidence  of  the  poor."  I  had  charge  as 
president  of  wards  13,  14  and  15 — seventy-five  thousand  people — for  years. 
I  have  seen  people  have  but  little  money  by  them,  but  do  their  best  to  keep 
up  the  payments  ;  ifs  a  wonderful  object  lesson,  and  those  who  from  their 
fine  residences  offer  suggestions  and  nothing  else  are  not  fit  judges. 

A  large  body  of  evidence  was  presented  from  all  parts  of  the 
country  tending  to  show  that  charges  made  against  the  system 
were  unfounded,  and  based  on  prejudice,  ignorance  or  personal 
spite,  and  these  views  gradually  prevailed  with  the  outside  public, 
as  well  as  with  the  members  of  the  Legislature.  A  large  number 
of  petitions  were  received  from  the  three  principal  cities  of  the 
State,  aggregating  thousands  of  names  of  men  and  women  voters 
of  the  State,  asking  the  Legislature  to  repeal  the  law  of  1893  and 
enact  the  regulating  statute  outlined  and  denned  in  House  Bill 
No.  317.  As  illustrating  the  widespread  extent  of  the  agitation 
in  favor  of  the  passage  of  the  law,  I  cannot  do  better  than 
quote  from  some  letters  from  citizens  of  Denver,  making  clear 
the  views  of  working  men  and  working  women,  aiming  in 


THE  PRUDENTIAL   INS.    CO.    OF  AMERICA,    1899.         279 

their  own  way,  and  within  the  limit  of  their  own  means,  to 
improve  the  conditions  of  their  struggle  for  a  higher  and  a  better 
social  life  and  provide,  as  far  as  possible,  against  the  hardships 
and  contingencies  of  human  life.  The  following  extract  is 
from  a  letter  from  Mrs.  Annie  B.  Bradley,  of  No.  402  South 
Broadway,  Denver,  Colo.,  dated  March  10,  1899  : — 

I  cannot  better  express  my  convictions  on  the  subject  than  by  stat- 
ing that  the  lives  of  my  two  children,  as  well  as  of  every  other  member 
of  my  family,  have  been  insured  for  the  past  seven  years,  and  I  feel  quite 
sure  that  those  who  know  me  will  not  think  that  I  placed  this  small  amount 
of  insurance  provision  on  the  lives  of  my  children  out  of  any  mercenary 
motive  or  for  any  purpose  of  gain.  I  believe  in  insurance  for  children  as 
much  as  I  believe  in  insurance  for  adults,  seeing  in  this  method  of  saving 
the  best  means  of  making  provision  for  possible  emergencies.  I  find  it 
difficult  to  express  my  feelings  as  to  those  who  have,  in  the  most  malignant 
and  uncalled-for  manner,  insulted  those  who  have  thus  given  practical 
proof  of  their  belief  in  the  merits  of  Industrial  insurance.  To  my  mind, 
the  so-called  humane  societies  who  are  opposed  to  House  Bill  317  are 
absolutely  ignorant  of  that  portion  of  our  population  who  avail  them- 
selves of  this  method  of  saving  and  insurance.  I  am,  perhaps,  as  familiar 
with  the  life  of  the  wage-earners  of  this  city  as  any  one,  and  to  my  mind 
only  those  who  have  forethought  and  thrift  make  use  of  this  method  of 
family  insurance. 

From  all  that  I  can  learn,  those  opposed  to  the  bill  regulating  the  insur- 
ance of  minors  and  repealing  the  law  of  1893  have  not  brought  forward  a 
single  fact  in  support  of  their  slanderous  and  libelous  allegations.  In  jus- 
tice to  the  thousands  of  self-respecting  and  upright  people  of  this  city  who 
believe  in  Industrial  insurance,  I  protest  against  the  mischievous,  mislead- 
ing and  insulting  method  pursued  by  the  Secretary  of  the  Humane  Society. 
The  man  does  not  speak  for  the  wage-earners  of  this  city,  but  rather  mis- 
represents the  best  interests  of  the  working  people  of  this  State.  I  feel 
quite  sure  that  we  are  more  competent  to  judge  of  the  merits  of  Industrial 
insurance  than  these  self-appointed  social  reformers,  who  have  never  been 
asked  by  any  workingmany  woman  or  child  to  represent  their  side  of  this 
question. 

A  still  more  emphatic  expression  of  the  workingmen's  view 
of  the  case  is  found  in  the  following  letter  from  Mr.  Jacob  Hauck, 
a  shoemaker  of  No.  2044  Humboldt  street,  Denver,  Colo. : — 

I  have  heard  a  good  many  arguments  in  regard  to  this  bill.  I  for  one 
believe  in  Industrial  insurance  and  always  advocate  it,  and  I  know  what  I 
am  talking  about,  having  lost  two  members  in  my  family  who  carried  that 
kind  of  insurance,  and  it  was  a  great  help  in  need.  It  is  a  grand  institution 
for  the  poor.  If  a  man  has  a  large  family  like  myself  and  has  to  work  for  a 
living,  it  is  almost  impossible  for  him  to  lay  away  money  ;  he  needs  it  all 


280  HISTORY  OF   THE   PRUDENTIAL. 

for  the  support  of  his  family.  But  I  could  always  pay  five  or  ten  cents  a 
week  to  some  Industrial  company  and  never  miss  it,  and  when  death  comes 
you  don't  have  to  ask  cold  charity  for  help.  When  I  lived  in  the  East  I  had 
all  my  children  insured,  and,  thank  God,  none  of  them  died.  Here  in 
this  city  I  lost  a  child  which  never  was  insured,  and  do  you  know  where  that 
poor  thing  is  buried  ?  Away  out  in  the  prairie  is  a  place  called  Potter's 
Field,  and  there,  among  unknown  men  and  women,  lies  that  child  of  mine. 
It  makes  my  heart  ache  when  I  go  out  there  and  look  at  the  place  where 
my  child  is  buried.  I  take  it  as  a  personal  insult  when  I  hear  people  say 
that  the  poor  would  kill  their  little  'ones  for  a  few  pieces  of  silver.  No ; 
they  insure  them  because  they  love  them,  and  when  they  die  they  can  be 
laid  away  decently.  I  look  on  this  kind  of  insurance  as  a  savings  bank  for 
the  poor.  I  have  carried  this  kind  of  insurance  in  my  family  for  the  last 
fourteen  years,  and  never  saw  anything  in  any  way  where  the  company 
tried  to  make  you  give  up  your  insurance  so  they  could  profit  by  lapses. 
On  the  contrary,  if  one  mentions  one  word  to  the  agent  as  to  lapsing  a 
policy  he  does  all  in  his  power  to  prevent  it  and  to  induce  one  to  keep  it 
up.  If  he  does  not  succeed  he  will  call  in  his  assistant  superintendent,  and 
if  he  can  not  make  one  keep  up  the  policy,  the  next  one  to  call  is  the 
superintendent  of  the  district,  and  they  will  all  tell  the  same  story, 
"  Keep  it  up — don't  drop  it — don't  give  up  your  insurance." 

Another  lengthy  letter  addressed  to  Mr.  Bartels,  the  cham- 
pion of  the  people,  was  from  a  Mrs.  L.  F.  Alexander,  of  No.  1462 
South  Tremont  street,  Denver,  Colo.  This  letter  also  illustrates 
the  strong  views  held  by  working  people  of  the  State  on  the 
subject  of  prohibitive  legislation,  and  I  may  be  permitted  to 
make  a  brief  extract  which  is  deserving  of  a  permanent  place  in 
this  summary  of  public  opinion  on  the  subject  of  Industrial 
insurance  : — 

Industrial  insurance,  to  my  mind,  is  a  Godsend  to  the  class  of  people 
who,  by  paying  a  small  sum  weekly,  provide  themselves  with  the  means  to 
give  their  little  ones  a  decent  burial  without  the  assistance  of  the  county. 
The  idea  has  been  advanced  [by  the  Humane  Society]  that  child  insurance 
causes  parents  to  murder  or  neglect  their  children,  whereby  they  would 
receive  the  pitiable  sum  which  in  some  cases  would  not  defray  the  expenses 
of  burial.  Such  an  argument,  to  my  mind,  is  simply  absurd.  In  the  same 
argument  the  suggestion  was  made  [by  the  Humane  Society]  that  the  county 
could  bury  the  children  of  the  poor.  Another  absurd  idea !  Why  should  pov- 
erty restrict  the  affection  and  respect  of  parents  for  their  children  ?  In  the 
same  argument  it  was  said  that  children  would  be  deprived  of  the  necessities 
of  life  by  their  parents  pay  ing  from  five  to  ten  cents  a  week  on  the  Industrial 
policy.  True,  Death  does  not  visit  every  home  of  the  poor,  but  in  case  it 
should,  how  much  more  difficult  for  the  parents  whose  children  are  not 
insured  to  defray  funeral  expenses,  which  must  be  paid,  than  to  pay  the 
paltry  sum  of  five  or  ten  cents  a  week  for  the  insurance  ?  Having  laid  away 


THE   PRUDENTIAL   INS.    CO.    OF   AMERICA,   1899. 

two  little  ones  under  very  trying  circumstances,  who  were  not  insured,  I 
know  whereof  I  speak.  I  fail  to  see  wherein  the  Humane  Society  is  doing 
an  act  of  humanity  by  opposing  the  insurance  of  children. 

The  result  of  this  agitation,  extending,  as  it  did,  over  a  con- 
siderable period  of  time,  is  best  summed  up  in  the  following 
extract  from  the  Weekly  Underwriter  of  April  15,  1899  : — 

A  feature  of  the  legislative  period  was  the  strong  fight  made  to  secure 
the  repeal  of  the  present  prohibitive  law  relating  to  child  insurance  and  to 
secure  the  passage  of  an  act  permitting  the  insurance  of  minors  under  the 
age  of  ten  years,  under  proper  restrictions  and  safeguards.  At  the  outset 
the  Humane  Society  and  the  newspapers  vigorously  opposed  the  proposed 
change.  The  industrial  company  waged  a  campaign  of  education,  printing 
and  distributing  a  number  of  telling  circulars.  In  spite  of  prejudice  arising 
through  ignorance,  misinformation  and  malice,  the  bill  passed  the  House,* 
and  a  strong  majority  for  it  was  found  in  the  Senate  ;  but  as  it  arrived  in  the 
Senate  late  in  the  session,  a  determined  effort  to  filibuster  indicated  by  two 
senators  compelled  the  majority  to  surrender  the  bill  in  order  to  pass  other 
measures  in  the  limited  time  left  at  their  disposal.  Had  the  bill  reached 
the  Senate  a  few  days  earlier,  it  would  undoubtedly  have  passed. f 

Although  but  little  more  than  seven  years  had  passed  since 
the  new  office  building  of  the  Company  had  been  occupied  for 
business  purposes,  it  had  gradually  become  evident  that  the 
rapid  increase  in  business  would  require  a  very  considerable 
addition  to  the  Company's  office  accommodations.  While  at  first 
a  large  part  of  the  building  had  been  leased  for  general  office 

*  In  Colorado  women  have  a  right  to  vote  and  hold  office.  It  is  there- 
fore of  interest  to  note  that  of  the  three  women  members  of  the  House  of 
Representatives,  Dr.  Mary  F.  Barry,  of  Pueblo,  and  Mrs.  Harriet  G.  R. 
Wright,  of  Denver,  voted  in  favor  of  the  repeal  of  the  prohibitive  statute 
of  1893. 

f  In  Ohio  an  attempt  was  made  in  the  early  part  of  1900  to  pass  a  bill  pro- 
hibiting the  insurance  of  children  under  the  age  of  twelve.  In  few  sections 
of  the  country  is  Industrial  insurance  so  thoroughly  understood  as  in  Ohio, 
where,  on  account  of  the  large  urban  population,  a  very  considerable  pro- 
portion of  the  people  are  insured  on  the  Industrial  plan  of  family  insurance. 
The  bill  was  very  carefully  considered  by  the  Senate,  hearings  were  granted 
to  the  companies  opposed  to  the  measure  and  to  the  Ohio  Humane  Society, 
in  favor  of  the  bill.  Every  phase  of  the  business  received  exceptionally 
careful  consideration  on  the  part  of  practically  every  member  of  the  Senate. 
In  view  of  these  facts  it  is  of  more  than  passing  interest  to  note  that  the 
bill  attempting  to  prohibit  the  insurance  of  minors,  under  the  age  of  twelve, 
in  the  State  of  Ohio,  was  defeated  by  a  vote  of  24  against  the  measure  and 
only  one  vote  (the  author  of  the  bill)  in  its  favor. 


282  HISTORY   OF  THE   PRUDENTIAL. 

purposes,  gradually,  as  these  leases  had  terminated,  the  space 
had  been  occupied  by  the  Company  for  its  own  purposes. 
Anticipating  the  necessity  of  new  buildings,  additional  real 
estate  had  been  purchased,  and  during  September,  1899,  ground 
was  broken  for  the  erection  of  three  new  structures  adjoining  the 
present  home-office  building.  When  completed  the  home  office  of 
The  Prudential  will  be  unsurpassed  by  any  similar  building  in  the 
world  as  a  structure  devoted  almost  entirely  to  the  transaction 
of  a  life-insurance  business. 

Before  I  review  the  year's  results  in  more  detail,  it  is  but 
proper  that  mention  should  be  made  of  an  event  of  exceptional 
importance  in  the  history  of  the  Company.  I  have  on  previous 
occasions  referred  to  the  loyalty  of  the  agency  force  and  the 
Company's  high  appreciation  of  the  continued  service  of  its 
men.  Among  those  who  entered  the  Company's  employ  at  a 
critical  period  of  its  existence,  at  a  time  when  the  business  was  in 
its  very  infancy,  and  when  exceptional  courage  and  extraordinary 
effort  were  required  to  make  the  business  a  success,  was  Superin- 
tendent Peter  Egenolf,  who  had  entered  the  Company's  field  force 
as  an  agent  on  the  loth  of  November,  1879,  or  exactly  four  years 
after  the  first  application  for  Industrial  insurance  had  been 
received  by  the  then  Prudential  Friendly  Society.  Mr.  Egenolf 
celebrated  the  twentieth  anniversary  of  his  connection  with  the 
Company  by  a  banquet  tendered  by  him  to  the  officers  of  the 
Company  and  the  employees  of  his  own  office  at  the  Hotel  Savoy 
on  November  10,  1899.  At  the  dinner,  Mr.  Dryden,  as  Presi- 
dent of  The  Prudential,  paid  Mr.  Egenolf  a  high  tribute  as  a 
worker  in  the  service  of  the  Company,  as  one  who  had  borne 
himself  with  rare  skill,  energy  and  fidelity  all  through  his  long 
service.  He  gave  some  interesting  reminiscences  of  Mr.  Egenolf 's 
early  connection  with  the  Company,  and  concluded  by  presenting 
him  with  a  certificate  of  membership  in  The  Prudential  Old 
Guard,  Class  D,  likewise  with  the  diamond  badge  which  distin- 
guishes the  members  of  the  Old  Guard  who  have  been  twenty 
years  in  the  Company's  employ.  The  Vice- President  of  the  Com- 
pany, Dr.  Leslie  D.  Ward,  also  dwelt  in  his  remarks  upon  the 
splendid  qualities  of  Mr.  Egenolf,  referring  to  him  as  one  of  the 
men  who  had  so  ably  helped  to  build  up  The  Prudential,  and 
concluding  with  the  statement  that  ' '  No  man  in  its  field  service 
is  more  highly  esteemed  than  Mr.  Egenolf. ' ' 


THE  PRUDENTIAL   INS.   CO.    OF  AMERICA,    1899. 

Another  veteran  Superintendent,  Mr.  C.  V.  Dykeman,  of  the 
L,ong  Island  City  District,  celebrated  the  completion  of  his  twen- 
tieth year  of  service  with  the  Company  by  giving  a  banquet  at 
Delmonico's  to  his  brother  Superintendents  of  the  Long  Island 
District  and  some  representatives  of  the  home  office.  Mr.  Dyke- 
man shared  equally  with  Mr.  Egenolf  the  honor  of  having  been 
one  of  'the  Company's  most  loyal  and  faithful  Superintendents 
during  a  period  when  such  services  were  needed  most.  Mention 
must  also  be  made  of  Mr.  L.  W.  Frisbee  and  Mr.  K.  G.  Jackson, 
two  veteran  Superintendents,  who  have  almost  completed  their 
twenty  years  of  service  with  the  Company.  The  Prudential  is  un- 
der permanent  obligations  to  these  two  men  for  services  of  the 
highest  order  and  the  performance  of  duty  under  most  trying  con- 
ditions during  the  early  years  of  the  Company's  history.  There 
are  also  many  Agents  and  clerks  whose  services  extend  over  two 
decades,  and  who  have  in  no  small  manner  contributed  to  the  won- 
derful success  of  the  Company,  but  want  of  space  forbids  more 
than  incidental  mention  of  this  fact.  It  is  not  too  much  to  say 
that  in  few  institutions,  in  few  business  organizations,  exist  such 
happy  and  cordial  relations  as  are  found  among  the  officers  of  The 
Prudential  Insurance  Company  and  its  employees.* 

At  the  close  of  the  year  the  total  number  of  Industrial  policies 
in  force  had  reached  3,406,189,  insuring  the  sum  of  $389,139,257, 
indicating  again  over  the  preceding  year  of  481,663  Industrial 
policies  and  of  $55, 147,057  of  Industrial  insurance.  In  combining 
Industrial  and  Ordinary  business,  The  Prudential  had  in  force  at  the 
close  of  1899  3,509,417  policies,  and  insurance  amounting  to  more 
than  one-half  billion  of  dollars,  the  exact  figures  being  $502 , 30 1 , 486. 
Of  all  the  insurance  companies  in  the  United  States,  only  four  have 
insurance  in  force  exceeding  this  sum,  and  the  youngest  of  these 
companies  is  many  years  older  than  The  Prudential. 


*  Another  Superintendent,  Mr.  W.  F.  L,awson,  of  Philadelphia,  cele- 
brated the  anniversary  of  his  twentieth  year  of  continued  connection  with 
The  Prudential  on  January  30,  1900.  Mr.  Dryden,  who  was  present  at  the 
banquet,  referred  to  Mr.  Lawson  as  one  of  the  men  through  whose  efforts 
The  Prudential  had  reached  the  commanding  position  of  being  the  leading 
insurance  company  in  the  State  of  Pennsylvania.  Mr.  L,awson  represents 
one  of  the  highest  types  of  an  Industrial  underwriter,  and  is  looked  upon 
as  a  model  by  all  who  have  had  the  privilege  of  personal  relations  with  him 
during  his  long  and  exceptionally  successful  career. 


284  HISTORY   OF  THE  PRUDENTIAL, 


CHAPTER  XVI. 

SUMMARY   OF  CONCLUSIONS   AND   RESULTS. 

Of  life  insurance  for  workingmen  it  has  been  said,  with 
much  truth,  that  "it  is  not  an  end  in  itself,  but  a  means  to  an 
end,"  that  it  is  "  primarily  a  savings  institution  by  which  men 
are  assisted  to  make  provision  for  future  contingencies,"*  and 
with  equal  truth,  by  another  authority  on  social  economics,  that 
1 '  It  is  evident  that  insurance  of  various  kinds  is  an  indispensa- 
ble condition  of  that  economic  security  for  the  laboring  classes 
which  is  so  desirable  for  their  happiness  and  for  the  welfare  of 
society,  and  which  must  form  part  of  the  solution  of  the  labor 
problem. "  f  It  is  my  firm  conviction  that  in  the  vast  improve- 
ment of  the  material  and  moral  condition  of  our  working  people, 
which  undoubtedly  has  taken  place  during  the  past  quarter- 
century,  Industrial  insurance  has  done  much  to  help  bring  about 
this  much-to-be-desired  result,  and  that  it  has  had  its  share  in  the 
gradual  solution  of  the  so-called  labor  question  by  increasing 
the  degree  of  economic  security  and  social  welfare,  the  evidences 
of  which  we  meet  with  in  all  directions.  But  whatever  the 
final  verdict  of  the  economist  and  student  of  social  progress, 
one  fact  stands  out  broadly  which  must  needs  attract  atten- 
tion, and  which  can  neither  be  ignored  nor  explained  away, — the 
fact  that,  of  all  forms  of  social  institutions  making  for  the 
improvement  of  the  condition  of  the  masses  by  the  application 
of  sound  principles  of  insurance  and  finance,  Industrial  insur- 
ance holds  to-day  the  most  commanding  position,  counting  its 
patrons  by  more  than  thirty  millions  the  world  over,  while  in  the 
United  States,  during  the  short  space  of  a  quarter  of  a  century, 
its  operations  have  reached  an  extent  unknown  in  the  earlier 
history  of  American  life  insurance. 

*  W.  F.  Willoughby,  Workingmen's  Insurance,  pp.  2-3.     Crowell  &  Co., 
New  York,  1898. 

|  Richard  T.  Ely,  The  Labor  Problem  in  America,  p.  141. 


SUMMARY  OF  CONCLUSIONS  AND   RESULTS. 


285 


By  the  ist  of  January,  1900,  the  eleven  principal  Industrial 
companies  for  which  the  information  has  been  published  returned 
10,026,442  Industrial  policies  as  in  force  on  December  31,  1899, 
for  the  sum  of  more  than  one  billion  of  dollars,  or,  to  be  accurate, 
$1,290,436,355.  The  table  which  follows  will  give  the  details  for 
each  of  the  eleven  companies,  together  with  the  location  of  the 
principal  offices,  indicating  the  vast  numerical  and  territorial 
extent  of  the  business  : — 

INDUSTRIAL  INSURANCE  IN  THE  UNITED  STATES. 
JANUARY  i,  1900. 


COMPANIES. 

lyOCATION  OF 

HOME  OFFICB. 

No.  OF  POLI- 
CIES IN  FORCE. 

AMTS.  OF  IND. 

INS.   IN   FORCB. 

Metropolitan,  .... 
Prudential  .  . 

New  York,  N.  Y. 
Newark    N   J 

4,855,756 
a  Ao6  1  80 

$688,629,175 

380  O^Q  2^7 

John  Hancock,  .... 
Life  Ins.  Co.  of  Va.,  . 
Sun  

Boston,  Mass. 
Richmond,  Va. 
Louisville    Ky. 

1,  069,  [97 
219,679 

14.8  O4Q 

141,609,904 
20,246,656 
16  368  863 

Western  &  Southern,  . 
Baltimore  Mutual  Aid, 
Pacific  Mutual,  .... 
Colonial 

Cincinnati,  O. 
Baltimore,  Md. 
San  Francisco,  Cal. 
Tersev  Citv    N    T 

117,545 
86,251 
61,709 

07  6o7 

10,881,961 

5»I50,963 
11,779,229 

2  S^d.  O7^ 

Mutual  .  .  . 

Baltimore    Md 

21   132 

2  3OA  762 

Provident  Life,  .... 

Wheeling,  W.  Va. 

13,238 

1,571,510 

10,026,442 

$1,200,  4^6.^5 

If  we  briefly  compare  the  numerical  aspect  of  the  results 
attained  by  Industrial  insurance  companies,  with  the  results  at- 
tained by  Ordinary  life  companies  and  savings  banks,  we  have 
proof  in  the  following  table  that  the  most  recent  form  of  life 
insurance  and  savings  has  made  progress  far  exceeding  the  prog- 
ress of  other  forms  of  insurance  and  thrift  in  this  country  : — 

COMPARATIVE  RESULTS  OF  INSURANCE  AND  SAVINGS 

INSTITUTIONS  IN  THE  UNITED  STATES.     1899. 
NOMBER  OF  INSTITUTIONS.  NUMBER. 

ii  Industrial  Life  Companies,* Policy-holders,     .    .    .10,026,442 

942  Savings  Banks, Depositors, 5,687,818 

58  Ordinary  Life  Companies, Policy-holders,     .    .    .    2,807,476 

*  Six  of  these  companies  transact  also  an  Ordinary  business.  The  num- 
ber of  Ordinary  policies  in  force  with  these  companies  on  December  31, 
1899,  was  268,153,  for  $300,175,426  of  life-insurance  protection.  The  average 
amount  per  policy,  only  $i,  120,  will  illustrate  the  Industrial  character  of  the 
average  Ordinary  risk  in  the  Industrial  companies. 


286  HISTORY   OF   THE   PRUDENTIAL. 

This  result  is  without  a  parallel  in  economic  or  social  history. 
It  would  have  been  impossible  but  for  the  all-important  fact, 
which  I  feel  .satisfied  has  been  brought  out  clearly,  that  Industrial 
insurance,  as  illustrated  in  the  history  of  The  Prudential  Insurance 
Company  of  America,  is,  like  society  itself,  ' '  not  a  manufacture, 
but  a  growth," — a  growth,  I  may  add,  fully  in  harmony  with  the 
healthy  and  normal  progress  of  the  working  people  of  this 
country  during  the  past  quarter-century.  If,  in  the  words 
of  Mr.  Devine,  it  is  a  "mental  trait  of  the  economic  man," 
to  readily  ''accept  the  final  judgment  of  the  community  as  to 
the  market  value  of  the  commodities  and  services  he  wishes 
to  buy  or  sell,"*  we  must  concede  that  Industrial  insurance 
must  meet  not  only  inherent  and  definite  needs  not  supplied  by 
other  agencies  or  forms  of  thrift,  but  that  these  wants  and 
needs  are  supplied  to  the  satisfaction  of  the  millions  who,  in 
ever-increasing  numbers,  are  becoming  patrons  of  the  Industrial 
companies. 

We  must  also  accept  the  further  conclusion  that  the  progress 
of  Industrial  insurance  is  evidence  of  a  healthy  economic  and 
social  instinct,  and  that  the  requirements  of  society  are  fully  met 
in  the  immediate  and  remote  results  which  have  been  accom- 
plished. I  fully  agree  with  Mr.  Devine,  that  "  It  is  a  mistake, 
though  not  an  uncommon  one,  to  credit  the  economic  instinct  with 
the  disposition  to  place  material  satisfactions  above  those  which 
spring  from  man's  higher  nature, ' '  for  ' '  the  true  economic  instinct 
guards  against  just  that  tendency.  It  fixes  the  eye  upon  the 
future  and  highest  want,  rather  than  upon  the  lower  and  im- 
mediate want,"f  and  in  the  light  of  this  reasoning,  indicative 
of  a  thorough  knowledge  of  the  life  and  struggle  of  the  industrial 
masses,  I  believe  that  we  may,  with  perfect  justice,  concede  to  the 
policy-holders  of  Industrial  companies  the  credit  of  having  aimed 
high  in  their  efforts  to  improve  the  condition  of  their  daily  strug- 
gle against  poverty  and  want,  by  providing  to  the  extent  of  their 
ability  against  the  uncertainties  of  human  life  itself .  The  more 
Industrial  insurance  is  studied,  the  more,  I  believe,  will  others 
share  with  me  the  conviction  that  it  forms  one  of  the  most  useful 
of  modern  institutions  making  for  the  improvement  of  social  life 


*  Economics,  p.  13.     The  Macmillan  Co.,  N.  Y.,  1898. 
t  Ibid.,  p.  51. 


SUMMARY  OF   CONCLUSIONS   AND   RESULTS.  287 

and  the  increase  of  economic  security.  It  has  properly  been 
called  ' '  family  insurance, ' '  and  such  it  truly  is  in  the  complete 
sense  of  the  word,  including  in  its  beneficence  a  provision  for 
certain  recognized  wants  and  needs  of  the  entire  family,  while  at 
the  same  time  a  more  or  less  sufficient  provision  is  made  for  the 
immediate  needs  of  the  widow  and  orphan  as  the  first  duty  of 
self-reliant  workingmen.  If  it  is  true,  in  the  words  of  Mr. 
Lecky,  that  "improved  conduct  and  improved  circumstances  are 
to  an  English  mind  the  chief  and  almost  the  only  measure  of 
progress,"  I,  for  one,  cannot  escape  the  conclusion  that,  from 
considerations  of  the  highest  degree  of  public  welfare,  this  system 
of  life  insurance  is  worthy  of  the  careful  study  and  sympathetic 
consideration  of  all  who  have  the  best  interests  of  the  working 
classes  at  heart. 

Want  of  space  does  not  permit  of  a  more  extended  consider- 
ation of  the  general  social  and  economic  aspects  of  Industrial 
life  insurance  as  a  modern  form  of  thrift,  the  result  of  ages  of 
gradual  change  and  development  of  the  most  ancient  forms  of 
human  association,  but  I  trust  that  I  have  succeeded  in  making 
it  plain  to  the  reader  that  we  have  in  Industrial  insurance  a 
form  of  thrift  which  no  economist  or  student  of  social  problems 
can  properly  and  wisely  ignore,  a  form  of  thrift  which,  rather 
than  deserving  of  that  marked  degree  of  indifference  which  alone 
explains  the  paucity  of  all  reference  to  the  entire  subject  of  life 
insurance  in  works  on  economics  and  social  science,  is  fully 
worthy  of  the  most  careful  and  thorough  study  on  the  part  of 
those  who  concern  themselves  with  socio-economic  questions  di- 
rectly affecting  the  welfare  of  the  working  people  of  this  country. 
As  far  as  it  has  been  possible,  I  have  tried  to  give  full  consider- 
ation to  all  essential  phases  and  aspects  of  more  than  passing 
interest  to  the  reader  and  student  of  insurance  progress.  I  have 
traced  from  the  earliest  beginning  the  development  of  the  first 
Company  organized  in  the  TJnited  States  for  the  successful  trans- 
action of  this  form  of  insurance,  and  the  development  of  its 
methods  and  practice  in  conducting  the  business.  It  only  re- 
mains for  me  to  treat  of  the  general  results  as  they  are  restated 
in  the  statistical  evidence  of  the  quarter-century  progress  of  The 
Prudential,  and  such  related  evidence  as  will  further  illustrate 
the  importance  of  this  form  of  life  insurance  for  working  people 
from  the  standpoint  of  public  policy. 


288 


HISTORY   OF    THE    PRUDENTIAL. 


The  first  table  to  which  I  would  direct  attention  will  show  in 
a  condensed  form,  yet  with  sufficient  detail,  the  uninterrupted 
business  progress  of  The  Prudential  during  the  entire  period  of 
its  history.  The  returns  as  to  policies  in  force  and  the  amounts 
of  insurance  are  given  separately  for  both  departments  of  the 
Company's  business,  for  the  Industrial  for  1876-1899,  and  for  the 
Ordinary  for  1886-1899  : — 

THK  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 

1876-1899. 
OUTSTANDING  INSURANCE. 


YEARS  ENDING 

INDUSTRIA 

L  INSURANCE. 

ORDINAR 

v  INSURANCE. 

DEC.  3iST 

No. 

AMOUNT. 

No. 

AMOUNT. 

1876,  

4,816 

$443,072 

1877,  
1878,  

1879,  
1880,  
l88l  ... 

11,226 
22,808 

43,715 
87,462 

J77  C82 

1,030,655 

2,027,888 
3,866,913 
7,347,892 
IO  Q5Q  Q48 

1882,  
1883,  

196,007 

277  QI7 

15,738,973 
27,  O^T,,  075 

1884,  .  . 
1885,  

324>794 
422  671 

28,545,189 

40,  266,44^ 

1886,  
1887,  .  .  . 

548,433 
7^6,000 

59,328,627 
81,694,088 

427 

735 

$585,500 
045,000 

1888 

gCQ  O6/1 

02  418  854 

QI5 

I  242  Q2Q 

l88q 

I  OQQ  312 

117  357  415 

I  83Q 

2  328  862 

1800  . 

I  228  332 

135  084  4Q8 

3  272 

4.O7Q  156 

1801. 

I  360  383 

I5O  758  QO7 

5  677 

6,8oi,435 

1802.  . 

i  653  4.6=; 

184,306  2O6 

8,120 

9,5^1,076 

1893,  
1804.  , 

1,941,533 
2,256,014 

218,199,566 
25Q,84O,O27 

10,472 

17,752 

12,441,733 
20,504,727 

1895,   .... 
1896 

2,330,741 

2  477  25  I 

268,414,100 
27Q  O3O  638 

30,893 

35  8O7 

34,716,055 

41,422  84^ 

1807 

2  658  7OO 

3O3  77O  052 

52,583 

5Q,  346,  6^8 

1898,  

2,024,526 

333,q02,2OO 

71,927 

80,554,853 

1899,  

3,406,189 

389,039,257 

103,228 

113,162,229 

According  to  this  table  the  total  number  of  Industrial  policies 
now  in  force  is  3,406,189,  or  more  than  half  a  million  in  excess 
of  the  total  number  of  Ordinary  policies  in  force  with  fifty-eight 
American  life  companies  in  1899.  The  Ordinary  policies  of  the 
Company  number  103,228,  placing  The  Prudential,  after  but 
fourteen  years  of  Ordinary  business  operations,  in  the  front  rank 
with  the  giant  life  companies  of  the  present  day.  I  add,  as  a 


SUMMARY  OF   CONCLUSIONS   AND   RESULTS. 


289 


further  indication  of  progress,  a  table  showing  for  each  year  of 
business  operations  the  annual  average  amount  of  insurance  in 
force  per  policy  for  both  the  Industrial  and  Ordinary  business 
of  the  Company  : — 

THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 
1876-1899. 


YEARS  ENDING  DEC.  3isx. 

AVERAGE  INDUSTRIAL 
POLICY. 

AVERAGE  ORDINARY 
POLICY. 

1876  . 

fo2  oo 

1877. 

qi  8l 

1878             ... 

88  91 

1870 

88  46 

!88o      

84.  01 

1881  . 

82  os 

1882  

U^   WJ 

80  10 

188* 

84  16 

1884 

87  8q 

i88s,  

qS  27 

1886,  

108  18 

$1,371  IQ 

1887,  

no  86 

,285  71 

1888  

1  08  72 

,3S&  3Q 

1889  . 

106  76 

,266  37 

*<-"->:?> 
1890,  
i8qr. 

109  97 
no  82 

'  ;:  •?' 
,246  69 

,iq8  os 

1892,  

III  47 

,173  78 

i8q3, 

112  ^q 

,188  10 

1894,     

US  l8 

,ISS  07 

i8qs,  ...       

n5  16 

,123  75 

1896,  

114  49 

,156  84 

1807  . 

114  26 

,128  63 

1808 

114  20 

I  Iiq  qs 

l8qq,  . 

114  22 

I,oq6  24 

It  will  be  observed  that  the  average  amount  per  policy  in 
force  has  been  subject  to  more  or  less  fluctuation  as  regards  the 
Industrial  business,  but,  nevertheless,  a  distinct  tendency  is 
apparent  towards  a  higher  average,  while  the  contrary  is  to  be 
observed  in  the  Ordinary  business.  As  regards  the  Industrial 
business,  this  increase  in  average  amounts  is  due  partly  to 
increased  benefits  at  the  earlier  ages,  and  partly  to  the  additional 
benefits  payable  on  policies  subject  to  the  many  voluntary  con- 
cessions, but  largely  in  consequence  of  an  increasing  demand  for 
policies  for  larger  amounts  as  a  means  of  providing  not  only  for 
the  burial  expenses,  but,  in  addition,  for  at  least  a  small  fund  for 
the  support  of  surviving  members  of  the  family.  Cases  are 
becoming  more  and  more  numerous  where  it  can  be  said  that 


290  HISTORY   OK   THE   PRUDENTIAL. 

Industrial  insurance  has  provided  for  widows  and  orphans  in 
addition  to  its  primary  purpose  of  meeting  the  expenses  of  burial 
and  last  illness.  One  such  case  I  may  mention  as  having  been 
referred  to  in  the  Sixteenth  Annual  Report  of  the  Boston  Asso- 
ciated Charities  (1895,  p.  54),  where  I  find  it  stated  that 
' '  After  the  death  of  the  man  the  insurance  money  was  enough  to 
pay  a  few  debts  and  leave  enough  for  the  wife  to  use  until  some 
course  of  action  could  be  decided  upon.  The  family  is  now  quite 
comfortable.  "*  Such  illustrations  of  the  value  of  Industrial  insur- 
ance in  individual  instances  could  be  furnished  by  the  thousands 
from  the  records  of  the  companies,  but  want  of  space  forbids  more 
than  incidental  mention.  Still  it  is  true,  as  it  has  well  been  said, 
that  ' '  The  final  value  of  all  scientific  work  lies  in  the  principles 
evolved  from  individual  instances,"  and  hence  the  value  of  cases 
like  the  one  quoted. 

The  decrease  \vhich  has  taken  place  in  the  average  amount 
of  Ordinary  policies  must  also  be  accepted  as  proof  of  the  asser- 
tion that  Industrial  companies,  in  developing  their  Ordinary- 
business,  have  done  so  in  a  different  direction  than  that  fol- 
lowed by  other  Ordinary  companies,  in  that  they  have  extended 
the  benefits  of  life  insurance,  after  a  vast  amount  of  insurance 
education,  to  a  class  of  people  who  have  not  been  reached 
by  the  non-Industrial  level-premium  companies.  The  vital 
difference  between  the  Ordinary  business  transacted  by  Indus- 
trial companies  and  the  business  of  other  Ordinary  companies 
is  illustrated  by  the  fact  that,  while  the  average  amount  of  an 
Ordinary  policy  in  The  Prudential  in  1899  was  $1,094,  tne 
average  amount  for  all  Ordinary  companies  reporting  to  the 
New  York  Insurance  Department  in  1898  was  $2,382,  a  very 
material  difference,  indicating  that  the  Industrial  companies 
extend  the  benefits  of  Ordinary  life  insurance  to  a  class  of  people 
not  reached  by  the  other  Ordinary  life  companies. 

*  I  find  mention  of  a  somewhat  similar  case  in  the  Fortieth  Annual 
Report  of  the  Chicago  Relief  and  Aid  Society,  where  it  is  stated  that — 

"No.  43,660  is  the  case  of  a  German  with  a  wife  and  two  boys,  eleven 
and  eight  years  old.  He  bore  an  exceptionally  high  character,  and  had 
never  needed  or  asked  aid  till  after  a  six  months'  illness  of  cancer  of  the 
stomach,  of  which  he  died  a  month  later.  The  widow  received  $500  insur- 
ance, and  after  paying  the  funeral  expenses  and  other  debts  incurred  depos- 
ited the  remaining  three  hundred  in  Dreyer's  Bank,  which  failed." 


SUMMARY   OF   CONCLUSIONS   AND   RESULTS. 


291 


While  at  first  The  Prudential  confined  its  operations  exclu- 
sively to  the  transaction  of  an  Industrial  business  and  only  com- 
menced the  Ordinary  business  in  1886,  it  will  be  observed,  on 
comparing  the  number  of  Industrial  and  Ordinary  policy-holders, 
that  at  present  the  Ordinary  business  forms  2.9  per  cent,  of  the 
total  number  of  policies  in  force,  while  in  amount  the  Ordinary 
forms  22.5  per  cent,  of  the  entire  business  of  the  Company.  Since 
the  ratio  of  Ordinary  to  total  business  has  been  gradually,  though 
very  slowly,  on  the  increase,  it  may  be  assumed  that  this  growth  of 
the  Ordinary  department  will  continue  and  in  time  assume  propor- 
tions equally  extensive  with  the  Industrial  part  of  the  business. 

The  aggregate  premium  income  of  the  Company,  from  both 
the  Industrial  and  Ordinary  business,  during  the  past  twenty- 
four  years  of  business  operations,  is  set  forth  in  the  following 
table  : — 

THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 

1876-1899. 
PREMIUM  INCOME. 


YKARS  ENDING 
DEC.  3iST. 

INDUSTRIAL. 

ORDINARY. 

TOTAL. 

1876    . 

$14  4Q"^ 

jJJlA    AQS 

1877.  . 

28  517 

p^j^yo 

08  e;i7 

1878,  

en  8l7 

CQ  8l7 

l87O 

T2I    ^60 

oy>OA/ 

l88o    . 

oco  Q^8 

1881,  
1882    

402,947 
C7I    5QC 

^ou'yo° 

402,947 
r<7j    CQC 

1883    . 

828  9TI 

o/^oyo 
828  911 

1884, 

I  127  738 

I  127  738 

i88s,  . 

1,468  Q^6 

i  d.68  Q"s6 

1886 

2  OQQ  ^23 

1887    . 

2  008  ^  ^  ^ 

$>i'*i//6 

1888 

3  616  168 

oo  >/*•*•* 

A3   327 

-s>y4^)-'o/ 

36<sQ  AQ< 

1889    . 

4374  486 

4o»o^/ 

68  347 

>uoy>4yo 

4AAO    833 

1800    . 

c  TI-J  808 

122  Q78 

c  636  876 

l8qi,  . 

6  217  72Q 

JQC     CC4 

6  413   283 

1892 

7  214  ^61 

3TT   282 

1803 

8  679  468 

AQX    176 

OZO)°44 
o  o8j  RAA 

1804    . 

IO  2Q5  877 

4*-o>o/u 

CQ4  42  6C 

iScK    . 

IO  QOI  674 

QQI  OQ3 

II  892  767 

1806    . 

II  QQI   713 

yyl>^y6 
I   337  Q3I 

13  32Q  6>AA 

iU^VJ, 

1807,  . 

12  762  CKI 

I  788  QI7 

I  A    CCT  868 

1898,  

13,642,10! 

2  4Q7  261 

l6  I3Q  4^2 

1800 

j  c  411  2^4 

36l7  ^"z8 

>U1/)OO° 

Total,  .    .    . 

$120,505,542 

$12,022,505 

$132,528,047 

HISTORY  OF   THE   PRUDENTIAL. 


It  is  shown  by  this  table  that  while  the  annual  premium 
income  now  exceeds  nineteen  million  dollars,  the  aggregate 
during  the  past  twenty-four  years  has  been  $132,528,047.  The 
table  is  properly  supplemented  by  one  showing  the  aggregate 
income  of  the  Company  from  all  sources,  including  the  income 
from  interests,  rents,  etc. ,  which  now  annually  exceeds  one  and 
a  half  million  dollars: — 

THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 

1876-1899. 
TOTAL  INCOME. 


YEARS  ENDING 
DEC.  SIST. 

FROM  POLICY 
HOLDERS. 

FROM  OTHER 
SOURCES. 

TOTAL. 

1876, 

$14,495 

$48 

$14,543. 

l8?7 

28  517 

IIQ 

28  636 

1878 

CQ  8l7 

66^ 

60  480 

1870 

121  ^60 

7067 

128  627 

1880 

25O  Q^8 

2O  064 

27T  Q22 

1881     .   ... 

4O2  Q47 

Q  7l8 

412  66s. 

1882,  

571,  5Q5 

I2,9Q8 

584,50,3. 

1883. 

828  911 

16,992 

845  QO3 

!884  

I  127  73,8 

28,842 

i  156  580 

i88s 

I  4.68  056 

4O.7O7 

I  5OQ  66^ 

1886,  
1887 

2,114,296 

2QJ.2  2^7 

50,66l 
71  OQ4 

2,164,957 
7  oi  3  3^1 

1888,  
1889  
1800, 

3.659.495 
4,442,833 

5,63,6,876 

97,589 
158,465 
184,777 

3,757,084 
4,601,298 
5,821,653, 

l8qi  

6,413,283, 

290,^49 

6,703,632 

1802,  

7,525,844 

363,034 

7,888,878 

1893  
1894,  

9,084,844 
10,890,302 

437,068 
567,032 

9,521,912 
11,457,334 

1895,  

11,892,767 

692,771 

12,585,538 

1896  

13,329,644 

828,802 

14,158,446 

1807 

14  551  868 

i  028  807 

1C  ego  76*» 

1898,  

16,139,452 

1,342,424 

17,481,876 

1899,  

19,028,792 

1,557,408 

20,586,200 

Total,  

$13,2,528,047 

$7,  808,  480 

$140,33,6,536 

The  total  income  from  other  sources  than  premiums  during 
the  twenty-four  years  of  business  operations  has  been,  as  shown, 
$7,808,489,  which,  added  to  the  preceding  total  of  $132,528,047, 
makes  a  grand  total  income  from  all  sources,  during  the  period 
1876-1899,  of  $140,336,536.  All  this  has  been  achieved  by  a 


SUMMARY  OF   CONCLUSIONS   AND   RESULTS. 


293 


Company  transacting  a  form  of  life  insurance  practically  unknown 
in  this  country  twenty-five  years  ago.  But  a  still  more  stupendous 
result  is  disclosed  in  the  aggregate  of  business  transactions  in  the 
field  operations  of  The  Prudential,  as  indicated  by  the  statement 
of  new  insurance  written  during  each  of  the  years  forming  the 
period  1876-1899  : — 

THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 

1876-1899. 
NEW  INSURANCE  ISSUED. 


YEARS  ENDING 
DEC.  3iST. 

INDUSTRIAL. 

ORDINARY. 

No. 

AMOUNT. 

No. 

AMOUNT. 

I876,  
1877,  
I878,  

1879,  
1880,  
1881,  
1882,  
1883,  

7,904 
10,521 
20,064 

35.879 
101,856 
124,746 
151,956 
227,417 
266,718 

304,773 
391,278 

519,577 
558,339 
721,830 
808,597 
623,804 
804,075 
,086,780 
,696,847 
,044,686 
957,804 
,008,868 
,043,998 
,401,399 

$727,168 
967,932 
1,785,696 
3,157,352 
8,555,904 
9,688,362 
11,541,210 
20,426,140 
24,892,268 
28,860,882 
49,142,316 
60,202,194 
58,214,981 
73,576,853 
95,674,484 
72,966,176 
92,677,524 
128,208,941 
205,128,243 

124,374,407 
108,223,712 

112,371,379 
121,080,784 
165,760,248 

552 

574 

458 
1,280 
2,484 
3,827 
4,503 
5,280 
12,245 
23,503 
17,695 

29,002 

39,208 

54,342 

$728,500 
689,000 

632,413 
1,568,542 

3,075,376 
4,449,I77 
5,080,097 
6,256,198 

13,872,559 
25,706,280 
21,190,031 
3i,58i,798 
43,614,000 
56,914,383 

1884,  

1885,  

1886,  
1887,  
1888,  .  .  .  .. 
1889,  .... 
1800 

1891,  

1892,  
1801 

1894,  
1895,  
1896,  

180? 

1898,  .... 

1800 

Total,  .  . 

I3,9?9»7i6 

$1,578,205,156 

194,953 

$215,358,354 

It  is  apparent  from  a  study  of  this  table  that  the  annual 
volume  of  new  business  has  been  subject  to  very  considerable 
fluctuations,  but  much  more  so  in  the  Industrial  than  in  the 
Ordinary  business  of  the  Company.  In  the  former,  the  largest 
volume  of  business  was  written  during  1894,  next  to  which  comes 


294  HISTORY   OF  THE   PRUDENTIAL. 

the  record  for  the  year  just  closed,  while  in  Ordinary  business 
the  largest  volume  of  new  applications  was  secured  during 
1899.  The  aggregate  result  of  a  quarter-century  of  effort  to 
' '  extend  the  principles  of  life  insurance  to  the  masses ' '  is 
summed  up  in  the  total  of  13,919,716  Industrial  and  194,953 
Ordinary  policies  written  and  revived  during  the  period.  If 
from  this  total  we  deduct  the  number  of  policy-holders  whose 
deaths  are  represented  in  the  return  of  claims  paid,  we  have 
still  a  vastly  larger  number  than  are  now  in  force  on  the  books 
of  the  Company.  The  difference  between  the  business  written 
and  the  business  at  present  in  force,  minus  the  mortality 
during  the  period,  represents  the  lapses,  the  terminations,  or 
the  waste.  But  not  wholly  so.  Large  numbers  who  have 
lapsed  had  for  a  time  the  benefit  of  life-insurance  protection, 
while  all  had  a  more  or  less  complete  opportunity  to  study 
and  reflect  upon  insurance  principles  by  the  temporary  protection 
and  the  possession  of  literature  and  contracts  illustrating  the 
methods  and  results  of  The  Prudential.  The  subject  has  been 
touched  upon  in  other  portions  of  the  work,  and  need  not  be 
reconsidered  here  in  detail,  except  that  it  may  be  pointed  out 
that  the  sincerity  of  the  Company  in  its  constant  efforts  to 
reduce  the  lapse-rate  is,  by  inference,  to  be  found  in  the  fact 
that  if  the  Company  had  never  been  compelled  to  lapse  a  policy 
it  would  now  have  on  its  books  an  amount  of  life  insurance 
vastly  in  excess  of  what  is  actually  the  case.  Instead  of  having 
an  Industrial  premium  income  of  $15,411,254,  the  annual 
income  would  be  approximately  $63,000,000,  and  instead  of 
having  three  and  a  half  million  of  policies  in  force,  the  number 
would  be  approximately  12,600,000.  Nor  can  a  fair  comparison 
be  made  with  the  lapse-rate  prevailing  in  Ordinary  companies, 
for  it  must  be  taken  into  account  that  the  policy-holder  of  an 
Industrial  company  has  fifty-two  chances  to  lapse  his  policy  to 
the,  at  most,  four  chances  of  an  Ordinary  policy-holder.  Still, 
even  when  such  comparisons  are  made  they  are  not  always  to 
the  disadvantage  of  the  Industrial  companies,  and  we  have  an 
excellent  illustration  in  the  experience  of  The  Prudential,  which 
during  the  year  1899  revived  of  the  total  new  Industrial  issue 
6.1  per  cent,  against  only  4.8  per  cent,  of  the  Ordinary  issue. 

Since  frequent  mention  has  been  made  of  Industrial  paid-up 
policies,  it  may  not  be  out  of  place  to  state  the  facts  briefly  as  to 


SUMMARY  OF  CONCLUSIONS  AND   RESULTS. 


295 


the  Company's  experience  with  this  feature  of  business  operations 
during  recent  years  : — 

THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 

1890-1899. 
PAID-UP  POLICIES. 


YEARS  KNDING  DEC.  SIST. 

INDUSTRIAL  POLICIES. 

NUMBER. 

PERCENTAGE  OF  TOTAL 
NEW  ISSUE. 

1890                              .... 

195 
175 
130 
199 
962 
1,815 
10,695 
39,240 
32,629 
31,333 

O.O2 
0.03 
0.02 
0.02 
0.06 
0.17 
1.  12 
3.89 
3-13 
2.24 

1891        

1802    . 

1801  . 

1804  

1805,  . 

1896 

1807 

1898  .    .           

l8qq   . 

1800—1800 

H7,373 

1.  12 

According  to  this  table  there  have  been  issued  during  the 
past  ten  years  117,373  Industrial  paid-up  policies,  which  repre- 
sent an  aggregate  total  of  $4,026,900  paid-up  insurance  protec- 
tion. The  ratio  of  paid-up  policies  to  the  total  new  issue  was 
highest  during  1897,  and  since  that  date  there  has  been  a  marked 
decline.  It  would  be  defeating  the  very  objects  of  life  insurance 
if  the  surrender  values  of  Industrial  or,  for  that  matter,  of 
Ordinary  policies  were  made  sufficiently  attractive  to  make  such 
surrender  profitable  or  expedient.  It  must  needs  be  the  aim  of 
every  insurance  company  to  attain  the  primary  object  of  the 
insurance  contract,  and  entirely  too  much  attention  has  been 
given  to  a  question  of  far  less  importance  than  some  writers,  and 
especially  professional  agitators,  have  attached  thereto.  It  has 
been  the  aim  of  The  Prudential  to  deal  equitably  with  unfortunate 
policy-holders,  and  no  company  has  been  more  ready  to  make 
voluntary  concessions  and  grant  exceptional  privileges  than  The 
Prudential.  But  the  managers  of  the  Company  have  never  lost 
sight  of  the  fact  that  persistent  policy-holders  are  entitled  to 


296  HISTORY  OF   THE   PRUDENTIAL. 

full  protection,  and  it  would  be  a  violation  of  its  trusteeship  of 
the  interests  of  millions  of  policy-holders  if,  by  over-liberal 
consideration  of  the  few,  the  entire  structure  of  Industrial 
insurance  should  be  placed  in  peril.  Hence,  the  fact  deserv- 
ing of  most  serious  consideration,  that  in  life  insurance,  to 
accomplish  the  purpose  of  the  business,  the  surrender  or  lapse  of 
a  policy  should  be  at  all  times  a  partial  loss  to  the  insured,  while 
its  revival  and  persistence  in  premium  payment  should  at  all  times 
be  to  the  advantage  of  the  insured.*  If  the  companies  have  suc- 
ceeded in  making  such  exceptional  progress,  it  is  largely  due  to 
the  fact  that  the  largest  benefits  and  best  results  come  to  those 
who  maintain  the  integrity  of  their  contracts  and  keep  their 
policies  in  force  until  death  or  maturity. f  For,  as  it  has  been 
said  with  much  truth,  "it  is  the  object  of  a  life-insurance  com- 
pany to  pay  claims,"  and  this  object  is  largely  defeated  by 
the  surrender  of  contracts,  which,  if  kept  in  force,  would 
have  realized  much  larger  returns  than  are  possible  on  policies 
voided  by  the  non-payment  of  premiums  during  the  life-time  of 
the  insured.  It  is,  therefore,  with  special  interest  that  the  next 
table  should  be  studied,  as  a  comprehensive  statement  of  the 


*  In  England  the  question  of  surrender  privileges  has  received  con- 
siderable attention,  especially  in  connection  with  parliamentary  investiga- 
tions into  the  practices  and  methods  of  Friendly  Societies.  In  one  of 
these  investigations  a  witness  called  the  attention  of  the  Commission  to  the 
fact  that  the  power  of  a  member  to  borrow  on  his  death  certificate  of 
membership  was  objectionable,  for,  he  stated,  "A  member  may  never 
become  entitled  to  funeral  money.  It  is  contrary  to  the  principles  of  a 
Friendly  Society,  and  tends  to  cheat  the  widow;"  and  that  "Even  the 
borrower  thought  it  bad  in  the  end."  (Young's  Report,  p.  70.)  In 
American  Fraternal  Societies  and  Assessment  organizations,  ostensibly 
operated  for  the  sole  benefit  of  the  insured,  there  are  no  surrender  provi- 
sions and  no  loan  privileges,  and  the  same  holds  practically  true  for  the 
English  Friendly  Societies  of  to-day. 

t  "  There  can  be  no  question  that  the  company's  first  duty  is  to  those  to 
whom  it  remains  under  contract  obligation — its  continuing  policy-holders. 
It  has  first  to  consider  how  they  are  affected  by  a  withdrawal  of  one  of 
their  number,  how  the  sure  basis  of  its  operations,  the  solvency  of  its  con- 
tracts, and  the  future  cost  of  their  administration  stand  affected.  The 
elements  of  the  problem  are  definite,  the  determination  of  their  weight, 
the  measurement  of  their  operative  force  is  somewhat  a  matter  of  varying 
circumstances."  (Jacob  L.  Greene  at  the  Milwaukee  Convention  of  Insur- 
ance Commissioners,  1898.) 


SUMMARY  OF   CONCLUSIONS   AND   RESULTS. 


297 


direct  financial  results  to  the  beneficiaries  of  policy-holders  during 
the  past  twenty-four  years  of  active  business  operations  : — 

THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 

1876-1899. 
TOTAL,  DISBURSEMENTS  TO  POLICY-HOLDERS. 


YEARS  ENDING 
DEC.  3iST. 

INDUSTRIAL. 

ORDINARY. 

TOTAL. 

1876,  

I1  >958 

$1,958 

1877  

5,296 

5»296 

1878!  

11,338 

",338 

l8?Q 

23,013 

23,OI3 

j88o    ...  

57,256 

57,256 

!88i  

111,508 

111,508 

!882   

157,706 

157,706 

1883,  

222,083 

222,083 

1884,  

322,382 

322,382 

1885,  

418,622 

418,622 

j886     

503,273 

^03,273 

!887    

841,319 

$12  5Q5 

853,914 

!888  

1,091.723 

5,161 

1,096,884 

1889,  

1,313,948 

17,375 

1,331,323 

1890,  .  .  

1,725,925 

28,973 

1,754,898 

1891,  

2,055,580 

49,722 

2,105,302 

1892,  

2,466,406 

73,250 

2,539,656 

1807, 

2,811,332 

104,876 

2,916,208 

1804,         

3,119,956 

117,239 

3,237,195 

3,655,513 

259,978 

3,915,491 

1896* 

4,083,839 

322,678 

4,406,517 

1897,  

4,522,932 

463,844 

4,986,776 

1898,  .  .  . 

4,861,553 

527,850 

5380,403 

iSOQ, 

5,426,545 

830,100 

6,256,64^ 

Total,  

$30.001,006 

$2,813,641 

$42,714,64.7 

It  will  be  observed  that,  in  the  aggregate,  there  has  been 
returned  to  the  Prudential  policy-holders  and  their  beneficiaries 
the  vast  sum  of  $42,714,647.  The  annual  disbursements  on  In- 
dustrial business  have  now  reached  almost  five  and  a  half  million 
dollars,  to  which  must  be  added  $830, 100  of  returns  to  Ordinary 
policy-holders,  or  a  total  of  payments  to  beneficiaries  during  1899 
of  $6,256,645,  being  equal  to  an  average  weekly  payment  of  over 
$i  20,000.  How  much  suffering  and  want  this  vast  sum  mitigates, 
and  partly,  at  least,  prevents  by  timely  assistance,  no  words  can 
adequately  describe.  Only  those  who  have  an  intimate  knowledge 


298 


HISTORY   OF  THE   PRUDENTIAL. 


of  the  life  and  struggle  of  the  industrial  population  can  even 
faintly  understand  the  deeper  meaning  of  these  figures,  figures 
which  indicate  only  in  small  part  the  vast  amount  of  good  accom- 
plished through  the  medium  and  by  the  method  of  Industrial 
life  insurance.  But  it  would,  indeed,  be  a  grave  error  to  look 
upon  the  results  attained  in  the  payment  of  claims  as  the  sole  test 
of  the  efficiency  and  beneficence  of  this  system  of  insurance.  The 
far  more  important  point  is  to  jemember  that  there  remains  in 
force  more  than  $389,000,000  of  insurance  protection  on  the  lives 
of  Industrial  policy-holders,  every  dollar  of  which  is  fully  secured 
by  an  adequate  reserve  safely  invested  in  the  very  best  kind  of 
securities,  fully  warranting  the  claim  that  ' '  The  Prudential  has 
the  strength  of  Gibraltar."  The  finances  of  the  Company,  the 
assets  and  surplus  to  policy-holders,  and  the  liabilities,  determined 
by  the  most  careful  methods  of  actuarial  valuation  as  applied  to 
Ordinary  life  insurance,  are  fully  set  forth  in  the  table  which 
follows  : — 


THK  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 
1876-1899. 


YEARS  ENDING 
DECEMBER  3isx. 

ASSETS. 

LIABILITIES. 
(4*) 

SURPLUS. 
(40 

1876 

$2  2^2 

$2,232 

1877. 

7  ^71 

$256 

7,115 

1878,  

21,391 

7,034 

14,357 

l87Q 

T3Q  8O  3 

2Q  265 

IOQ  538 

1880 

168  154 

71  I7O 

Q6  084 

!88i       

253  853 

i?8  067 

115,786 

1882,  

392,269 

227,233 

165,036 

1883,  

•163,178 

387,521 

175,657 

1884 

752  878 

423,438 

320,440 

1885,  

1,040,816 

635,827 

404,989 

1886,  

1,425,720 

1,019,617. 

406,103 

1887          .... 

I  067  360 

i  480  20  1 

487  O78 

1888,  

2,874,163 

2,097,944 

776,219 

1889  

3,024,205 

2,853,230 

1,071,065 

1800 

c  084  8qx 

3,741,021 

1,343,874 

1801, 

6,880,674 

5,440,617 

1,449,057 

1802. 

8,840,853 

6,622,411 

2,218,442 

1801,  .  . 

11,021,445 

8,285,884 

2,735,561 

1804,  

13,041,810 

10,100,033 

2,941,777 

1895,  

15,780,154 

12,470,317 

3,309,837 

1896,  .... 

IQ  541  828 

15,507,711 

4,O34,II7 

1807,  

23  084,^70 

18,744,452 

5,24O,Il8 

1898,  

28  887,196 

22,008,301 

5,888,895 

1899  

•^,048,760 

27,934,337 

6,014,421 

SUMMARY  OF   CONCLUSIONS  AND   RESULTS.  299 

There  is  abundant  evidence  in  this  table  of  inherent  strength 
and  permanent  financial  stability.  Year  by  year  material  im- 
provement has  been  made  in  the  accumulation  of  substantial 
assets  and  of  a  sufficient  surplus,  until  to-day  this  margin  of  safety 
exceeds  six  million  dollars.  As  to  the  investment  of  the  vast 
accumulation  of  assets,  accumulated  and  held  as  a  sacred  fund  for 
the  discharge  of  maturing  obligations,  it  may  be  of  interest  to 
the  reader  to  know  that,  of  the  sum  of  over  thirty-three  million 
dollars  (three  times  the  amount  of  accumulations  of  only  seven 
years  ago),  72.4  per  cent,  is  invested  in  bonds  and  mortgages 
(including  railroad  and  municipal  bonds),  13.9  per  cent,  is  in- 
vested in  real  estate,  8.3  per  cent,  consists  of  cash  in  bank,  3.0 
per  cent,  is  represented  by  premiums  in  course  of  collection, 
1.4  per  cent,  by  loans  on  policies  and  collateral  securities,  while 
i.o  per  cent,  represents  accrued  interest  and  rents.  Of  the 
liabilities  of  the  Company,  81.8  per  cent,  represent  the  reserve 
to  the  credit  and  for  the  security  of  policy-holders  ;  17.7  per 
cent,  represent  the  surplus,  including  capital;  and  0.5  per 
cent,  represent  other  liabilities  not  included  in  the  two  preceding 
items. 

Too  much  stress  cannot  be  laid  on  the  absolute  financial  secu- 
rity to  millions  of  policy-holders  represented  by  these  figures 
and  facts  dealing  with  the  finances  of  the  Company.  The  whole 
history  of  so-called  co-operative  and  assessment  insurance  is  one 
long  record  of  failure  and  of  fraud,  representing  untold  millions 
of  wasted  money  and  untold  millions  of  unpaid  claims,  but  most 
of  all  a  record  of  the  shameful  betrayal  of  a  sacred  trust.  It  is 
something  very  considerably  to  the  credit  of  the  managers  of 
Industrial  insurance  companies  that  failure  and  insolvency  have 
been  made  impossible  by  the  safe  and  substantial  foundations  on 
which  the  structure  of  Industrial  insurance  rests,  and  which,  as 
far  as  human  judgment  goes,  will  endure  as  long  as  the  Republic 
itself. 

Where  so  large  a  number  of  business  transactions  are 
required,  affecting  so  considerable  a  number  of  people  as  are 
represented  in  the  policy-holders  of  The  Prudential,  it  will  be  of 
interest  to  place  on  record  the  actual  number  of  employees  of  the 
Company  on  February  i,  1900,  together  with  the  corresponding 
data  for  the  year  1885,  for  which  the  information  has  been  given 
in  an  earlier  portion  of  this  work  : — 


3oo 


HISTORY   OF  THE   PRUDENTIAL. 


OFFICE  AND  AGENCY  FORCE  OF 
THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 

1885    AND    1900. 


FORCE. 

1885 

1900 

Executive  and.  clerical  force      

12^ 

811 

Superintendents  of  Districts      

2O3 

Assistant  Superintendents  of  Districts,  .... 
Inspectors  of  Districts,            
Afifents  (Canvassers  and  Collectors)                     • 

150 
I  2OO 

^6 
1,640 

7  802 

Total  Office  and  Field  Force 

I   ^OQ 

TO  AQO 

To  the  total  force  for  the  present  year  must  properly  be 
added  a  field  medical  staff  of  3,884  examining  physicians,  and 
further  45  employees  in  the  printing  department  and  46  em- 
ployees in  the  home-office  building  as  janitors,  elevator  attend- 
ants, etc.  The  increase  in  the  total  office  and  field  force  during 
the  period  1885-1900  has  been  595  per  cent. ,  while  during  the  same 
time  the  business  operations  of  the  Company,  as  measured  by 
the  amount  of  Industrial  insurance  in  force  (not  taking  into 
account  the  Ordinary  business),  have  increased  863  per  cent.,— 
in  other  words,  the  large  increase  in  employees  has  been  made 
necessary  by  the  still  larger  increase  in  business  operations.  The 
increase  is  perhaps  best  illustrated  by  the  average  weekly  issue 
of  new  policies,  as  shown  in  the  following  table  for  the  three 
years,  1879,  1889  and  1899  : — 

AVERAGE  NUMBER  OF  NEW  POLICIES  ISSUED  WEEKLY  BY 
THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 

1879,  1889,  1899. 


INDUSTRIAL. 

ORDINARY. 

WEEKLY  ISSUE. 

WEEKLY  ISSUE. 

l8?Q 

600 

1889,    

13,881 

25 

1800. 

26  950 

1,044 

SUMMARY  OF   CONCLUSIONS  AND   RESULTS. 

The  actual  extent  of  business  operations  will  be  more  clearly 
realized  in  this  statement  of  weekly  office  transactions  reaching 
now  an  average  issue  of  more  than  28,000  new  policies,  and 
weekly  claim  payments  exceeding  $120,000. 

A  very  interesting  and  suggestive  illustration  of  the  develop- 
ment and  highly  complex  nature  of  the  business  of  Industrial 
insurance  is  supplied  by  the  statistics  of  the  Printing  and  Supply 
Departments  of  The  Prudential.  According  to  the  returns  for 
the  year  1899,  these  two  departments  employ  more  than  sixty 
persons,  while  nine  presses  are  kept  continually  at  work  to  meet 
the  demands  of  the  office  and  field  force  for  the  large  number  of 
forms  and  different  kinds  of  supplies  required.  During  1899 
there  were  shipped  daily  by  express,  or  otherwise,  three  and  one- 
half  tons  of  matter — pamphlets,  paper,  forms,  letter-heads,  etc. 
A  large  amount  of  the  necessary  printing  includes  the  issue  of 
two  regular  publications  :  "The  Prudential,"  for  distribution  to 
the  Industrial  policy-holders,  and  "The  Weekly  Record,"  for 
distribution  to  the  field  force.  * '  The  Prudential ' '  is  issued  every 
other  month,  the  edition  never  being  less  than  two  million  copies. 
This  paper  contains  much  useful  information  on  the  subject  of 
Industrial  insurance,  rate  tables,  health  notes  for  the  home,  and 
a  list  of  current  claim  payments.  "  The  Weekly  Record  "  is  for 
the  field  force,  and  contains,  in  addition  to  useful  information  on 
the  subject  of  life  insurance,  a  record  of  the  results  obtained  from 
week  to  week  by  the  principal  Superintendents,  Assistants  and 
Agents  of  the  Company's  field  force.  "  The  Weekly  Record" 
has  proven  a  most  useful  element  in  the  development  of  an  esprit 
de  corps  and  acts  directly  as  an  incentive  and  an  encouragement 
to  increased  efforts  on  the  part  of  those  who  are  making  a  deter- 
mined struggle  for  individual  success  and  leadership  as  Industrial 
life  underwriters. 

So  much  having  been  said  as  regards  extent  of  operations, 
some  information  as  to  the  class  of  people  insured  on  the 
Industrial  plan  with  The  Prudential  Insurance  Company  may  be 
of  interest.  This  question  can  be  answered  in  a  number  of  ways, 
but  I  confine  myself  to  data  relating  to  the  nationality  and  occupa- 
tion of  the  insured.  First,  as  regards  race  and  nationality,  it  will 
be  recalled  that  it  is  not  now  the  practice  of  the  Company  to  solicit 
negro  risks,  on  account  of  adverse  legislation  compelling  Industrial 
companies  to  grant  the  same  benefits  to  persons  of  color  as  are 


302 


HISTORY  OF  THE   PRUDENTIAL. 


paid  to  whites,  in  contrast  to  the  recognized  fact  that  the  for- 
mer are  subject  to  a  death-rate  about  50  per  cent,  higher  than 
the  latter.  Hence  the  proportion  of  colored  persons  is  smaller 
than  would  be  the  case  were  the  former  and  more  equitable  prac- 
tice still  in  vogue.  Of  the  total  number  of  decedents  in  the 
Industrial  experience  of  The  Prudential  during  the  period  1891- 
1898,  only  2.5  per  cent,  were  persons  of  color. 


NATIONALITY  OF   DECEDENTS  INSURED  UNDER  INDUSTRIAL  POLICIES  IN 

THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 

1808. 


NATIONALITY  OF  DBCEDENTS. 

PER  CENT.  OF  TOTAL 
MORTALITY. 

Nat 
Bon 

ive-Born     .... 

62.18 
22.07 
12.01 
0.94 
0.74 
0.65 
0.29 
0.29 
0.27 
0.26 
0.20 
0.04 
O.O3 
0.03 

a  in  the  United  Kingdom,   ,    . 
Germany,      

Canada,      ... 

Austria-Hun  £*ary 

Scandinavia 

Switzerland,     
Russia   Poland  and  Finland 

Italy 

France               ...                    .            .... 

Holland  and  Belgium,          ....            ... 
South  America,  Mexico  and  West  Indies,  .    . 
Spain,  Portugal  and  Azores,   
Asia,  Africa  and  Turkey,     

It  is  shown  in  this  interesting  tabulation,  as  far  as  I  know, 
the  first  of  its  kind  relating  to  Industrial  insurance,  that  of  all 
the  deaths  during  the  year  1898,  62.2  per  cent,  were  of  persons  of 
native  birth.  Unfortunately,  no  data  are  at  the  command  of  the 
Company  as  to  the  parentage  of  the  insured,  this  question  not 
being  asked  in  the  application,  but  the  fact  is,  nevertheless,  signifi- 
cant that  the  larger  proportion  of  the  insured  in  The  Prudential 
are  native-born.  Next  in  numerical  importance  to  those  of  native 
birth  come  persons  born  in  the  United  Kingdom,  but  of  the  latter 
the  majority  are  Irish,  who,,  as  is  well  known,  form  a  very  large 
proportion  of  the  population  of  the  United  States.  Natives  of 
Germany  form  12.0  per  cent,  of  the  total  insured,  while  the  re- 
mainder is  made  up  of  practically  every  nationality  forming  the 


SUMMARY  OF  CONCLUSIONS   AND   RESULTS.  303 

heterogeneous  population  of  this  country,*  The  fact  that  so  large 
a  proportion  of  Germans  should  be  insured  is  of  considerable 
interest,  since  it  is  generally  conceded  that  this  element  of  our 
population  is  not  only  of  a  most  thrifty  and  saving  disposition,  but 
also  at  the  same  time  the  most  cautious  and  prudent  in  making 
life-insurance  provision  on  plans  not  likely  to  lead  to  disappoint- 
ment and  litigation.  It  may  not  be  out  of  place  to  add,  by  way 
of  comment,  that  during  recent  years  Industrial  insurance  on  the 
plan  of  The  Prudential  has  made  very  material  progress  in  Ger- 
many, in  spite  of  the  fact  that  compulsory  government  insurance 
is  supposed  to  meet  all  of  the  needs  of  the  working  population, 
and  with  German  thoroughness  a  hand-book  on  ' '  Die  Kleine 
lyebens-Versicherung  ' '  has  recently  been  published  as  a  guide  for 
prospective  insurers. 

The  facts  pertaining  to  the  nationality  of  the  insured  popula- 
tion are,  therefore,  confirmatory  evidence  that  the  class  of  people 
insured  with  Industrial  companies  represents  a  normal  proportion 
of  natives  and  foreigners,  and  that  it  is  an  error  to  suppose  that 
the  demand  for  this  form  of  insurance  is  largely  limited  to  the 
foreign-born  or  to  a  distinct  element  of  the  emigrant  population. 
While  we  have  no  absolute  test  as  to  the  moral  or  mental  char- 
acteristics of  these  people,  we  at  least  have  the  proof  that  no 
special  selection  of  a  distinct  class  or  element  of  the  population 
exists,  and  that,  in  view  of  the  large  proportion  of  native-born 
policy-holders,  the  system  of  Industrial  insurance  must  properly 
be  looked  upon  as  national  in  its  scope  and  operations. 

A  still  more  satisfactory  test  as  to  the  character  of  the  class 
of  risks  accepted  by  The  Prudential  is  supplied  by  a  detailed  state- 
ment of  the  principal  occupations  of  the  insured,  and  for  this 

*  During  1899  The  Prudential  Insurance  Company  paid  Industrial  claims 
in  the  following  countries  : — 

Australia,  Austria,  Azores,  Belgium,  Canada,  China,  Denmark,  England, 
Germany,  India,  Ireland,  Italy,  Norway,  Russia,  Scotland,  South  Africa, 
Sweden  and  Switzerland. 

Since  the  Company  does  not  transact  business  outside  of  the  United 
States,  all  of  the  claims  paid  in  foreign  countries  represent  policies  origi- 
nally taken  out  in  the  United  States,  but  continued  in  force  after  the  return 
of  emigrant  policy-holders  to  their  native  land. 

This  list  does  not  include  claims  paid  in  Cuba,  Puerto  Rico,  the  Phil- 
ippines and  the  Sandwich  Islands,  or  on  sailors  and  soldiers  in  the  service  of 
the  United  States. 


3°4 


HISTORY   OF   THE   PRUDENTIAL. 


purpose  I  have  taken  account  of  the  occupation  of   those  who 
died  during  the  two  years  1897  and  1898  : — 

THE   PRUDENTIAL   INSURANCE   COMPANY   OF   AMERICA. 
PRINCIPAL  OCCUPATIONS  OF  WHITE  MALES. 


INDUSTRIAL  MORTALITY  EXPERIENCE,  1897-1898. 
TOTAL  NUMBER  OF  MALE  DECEDENTS  (AGED  15  AND  OVER),  24,237. 


Letter  Carriers, 
Policemen,  .  . 
Soldiers,  .  .  . 


Actors, 

Lawyers,  Judges,  etc., 

Clergymen, 

Musicians,      

Photographers,     .    .    . 

Physicians, 

Teachers, 

Veterinary  Surgeons, 


NO. 
27 
7i 

139 


18 
23 
13 
5i 
19 
i? 
19 
ii 


Barbers, 189 

Hotel-keepers,      93 

Sextons,      14 

Watchmen, 267 

Drivers,  Truckmen,     ....  951 

Elevator  Men, 17 

Railway  Employees,  ....  489 

Telegraphers, 30 

Boatmen, 64 

Longshoremen, 68 

Pilots,      10 

Sailors, 72 

Captains, 30 

Bakers,  Confectioners,  ...  211 

Druggists, 145 

Grocers, 206 

Hardware  Dealers, 116 

Liquor  Dealers, 197 

Bartenders, 211 

Merchants,  Dealers,    ....  260 

Millers, 37 

Salesmen, 197 

Undertakers, 43 

Agents,           174 

Book-keepers, 156 

Brokers,              1 1 

Clerks, 665 

Stenographers, u 


NO. 

Tobacco  Workers, 238 

Electrical  Workers,    ....  273 

Gas  Workers, 117 

Glass  Workers, 123 

Jewelers,     .        166 

Gold  and  Silver  Workers,  .    .  171 

Brass  Workers, 71 

Copper  Workers, n 

Blacksmiths,      401 

Iron  Workers, 715 

Tin  Workers, 145 

Shoemakers, 558 

Tanners,      65 

Machinists, 460 

Paper  Workers,        40 

Printers,  Compositors,    .    .    .  223 

Lithographers 27 

Rubber  Workers, 20 

Hatters, 133 

Tailors, 350 

Carpet  Workers, 30 

Silk  Workers, 73 

Ropemakers, 21 

Spinners  and  Weavers,  .    .    .  144 

Coopers,      171 

Carpenters,    Cabinetmakers,  1,002 

Contractors, 53 

Masons, 401 

Brickmakers, 33 

Marble  Workers,      32 

Plumbers, 201 


Potters,    .    .    . 
Stone-cutters, 
Painters, 
Roofers,  .    .    . 
Riggers,      .    . 


53 

122 
550 

48 

18 


Farmers, 704 

Gardeners,      209 

Fishermen, 57 

Miners,           442 

Quarrymen, 29 

Engineers,  Firemen,  ....  364 


SUMMARY  OF   CONCLUSIONS  AND   RESULTS. 


305 


The  white  adult  male  decedents  in  The  Prudential's  Indus- 
trial experience  of  1897  an^  l898  maY  De  grouped,  according  to 
occupation,  as  follows  : — 


OCCUPATIONS. 

No. 

PER.  CENT.  OF 
TOTAL. 

Trades,  Industries  and  Manufactures,      .    . 
Laborers 

5,872 

4QAA 

24-2 
2O  4. 

Merchants  and  Dealers        .               .... 

322T 

T2_   7 

Building  and  Construction,         ..".... 
Transportation  and  Communication,   .    .    . 
Agriculture    Mining  Fisheries      

2,979 
2,036 
i  704. 

12.3 
8.4 
7.O 

Personal  Service     

1,4.4.0 

6.0 

Professional  Service,     
Government  and  Defense                   .       .    . 

456 
*i4 

x-9 

i  ? 

No  Occupation  and  Unstated                 .    • 

I   1^2 

4  8 

Total       

24.  2^7 

IOO.O 

These  tables  bring  out  very  clearly  the  truly  industrial 
character  of  the  business,  and,  had  space  permitted,  a  more 
detailed  list  of  occupations  would  have  shown  that  practically 
every  profession,  trade  and  industry  is  represented  among  the 
policy-holders  in  about  the  same  proportion  as  in  the  general 
population  according  to  the  United  States  census  of  1890.  It  is 
shown  that  among  the  insured  are  clergymen,  lawyers,  justices, 
physicians,  teachers,  soldiers,  sailors,  firemen  and  policemen ; 
every  form  of  social  life  finds  its  representation,  though,  as  a 
matter  of  course,  the  larger  proportion  of  the  insured  are  laborers, 
skilled  and  unskilled,  employed  in  the  numerous  industries  and 
trades.  It  is  a  matter  of  regret  that  it  is  not  possible  to  give 
the  exact  number  of  persons  insured  in  the  various  occupations, 
but  a  statistical  investigation  of  the  occupation  of  the  living 
would  hardly  be  productive  of  sufficiently  important  practical 
results  to  warrant  the  necessary  expenditure  of  money  and  time 
for  tabulation  and  analysis,  dealing,  as  The  Prudential  does, 
with  millions  of  policy-holders  ;  but  the  mortality  returns  here 
given  will  be  sufficient  to  indicate  the  truly  industrial  nature  of 
the  business.  Estimates  of  the  probable  number  insured,  based 
on  the  number  of  deaths  during  two  years,  have  been  made  by  the 
writer,  but  so  many  factors  have  to  be  taken  into  consideration  that 
the  results  can  be  only  approximately  correct.  Still,  as  regards  the 
most  important  occupations  it  may  be  of  interest  to  the  reader  to 


306  HISTORY  OF  THE   PRUDENTIAL. 

learn  that,  on  the  basis  of  the  best  available  data,  The  Prudential 
in  1898  had  approximately  113,100  laborers,  27,343  teamsters 
and  drivers,  30,700  carpenters,  20,300  iron  and  steel  workers, 
18,000  farmers,  34, 700  clerks,  14, 600  shoemakers,  18,200  printers, 
24,100  railway  employees,  17,900  miners  and  16,000  machinists 
insured  on  the  Industrial  plan  of  life  insurance. 

As  to  the  occupations  of  women,  I  have  afso  been  compelled 
to  limit  my  table  to  a  small  number  of  interesting  employments 
and  pursuits.  The  proportion  of  the  sexes  of  the  insured  is,  in 
the  Industrial  experience  of  The  Prudential,  about  the  same 
as  in  the  general  population,*  and,  as  must  necessarily  be  the 
case,  a  large  majority  of  insured  women  are  housekeepers.  For 
the  remainder  I  give  a  table  illustrating  the  truly  industrial  and 
national  character  of  the  business  of  the  Company  : — 

THE  PRUDENTIAIy  INSURANCE  COMPANY  OF  AMERICA. 
PRINCIPAL,  OCCUPATIONS  OF  FEMALES. 


INDUSTRIAL  MORTALITY  EXPERIENCE,  1897-1898. 
TOTAL  NUMBER  ADULT  (AGED  15  AND  OVER)  WHITE  FEMALE 

DECEDENTS,  23,837. 


Actresses, 8 

Artists, 5 

Musicians, 15 

Nurses, 96 

Teachers, 43 


Cashiers n 

Clerks,       101 

Stenographers, 23 

Book-binders, 34 

Boxmakers,      21 

Carpet  Weavers 15 


Telegraph  and  Telephone 

Operators, 6      j       Corsetmakers, 13 

Saleswomen, 63  Dressmakers,  Seamstresses,   .  414 

Store-keepers, 34             Milliners,      56 

Book-keepers, 33      I       Silk  Workers, 54 

This  table  does  not  require  further  comment,  but  has  been 
included  in  the  series  as  a  rather  interesting  contribution  to  our 
knowledge  of  woman's  share  in  life-insurance  development. 
While  in  Industrial  insurance  it  is  the  practice  to  place  a  small 
policy  on  every  member  of  the  family  rather  than  a  large  policy 
upon  a  single  member,  women,  as  a  matter  of  course,  have  been 

\ 

*  Of  the  total  number  of  decedents  in  the  Industrial  experience  of  The 
Prudential  during  the  period  1891-1898,  51.2  per  cent,  were  males  and  48.8 
per  cent,  were  females.  According  to  the  United  States  census  of  1890, 
1 '  Vital  and  Social  Statistics, ' '  Part  III. ,  the  sex  distribution  of  the  total  mor- 
tality in  the  United  States  was  52.2  per  cent,  males  and  47.8  per  cent,  females. 


SUMMARY   OF  CONCLUSIONS   AND   RESULTS.  307 

insured  in  about  the  same  ratio  as  men,  but  the  good  effect  of  life 
insurance  in  early  life  is  illustrated  in  the  increasing  number  of 
self-supporting  young  women,  who  continue  in  force  the  insur- 
ance placed  upon  their  lives  in  early  infancy  by  parents  whose 
memory  must  needs  be  held  in  higher  esteem  for  this  evidence  of 
prudent  forethought  and  affectionate  regard. 

These  facts  pertaining  to  the  nationality  and  occupations  of 
the  insured  will  make  it  plain  that  the  business  is  one  which  is  ap- 
plicable to  all  sorts  and  conditions  of  men,  and  that  it  is  truly 
national  and  industrial  in  its  scope  and  extent  of  operations. 
Perhaps  the  best  proof  of  this  assertion  is  to  be  found  in  the  fact 
that,  in  the  city  in  which  The  Prudential  was  founded,  in  1875, 
the  large  majority  of  the  population  are  now  insured  on  this  plan 
of  family  insurance.  In  Newark,  N.  J.,  during  the  year  1899 
there  occurred,  according  to  the  Board  of  Health,  3,548  deaths  of 
persons  one  year  of  age  and  over.  Of  this  number  1,307,  or 
36.8  per  cent.,  were  insured  in  The  Prudential,  while  in  the  other 
Industrial  companies,  as  far  as  my  information  goes,  about  an 
equal  number  of  policies  were  in  force,  indicating  a  total  of  about 
73  per  cent,  of  the  population  above  age  one  insured  on  the 
Industrial  plan.  If  we  exclude  the  lowest  pauper  class  and  the 
well-to-do  or  rich,  who  are  above  the  need  of  Industrial  insur- 
ance, it  will  be  seen  that  in  this  city,  to-day  one  of  the  leading 
manufacturing  cities  of  this  country,  but  a  very  small  proportion 
of  the  working  people  have  not  as  yet  availed  themselves  of  this 
form  of  insurance  as  a  means  of  providing  against  some  of  the 
uncertainties  of  human  life. 

As  to  the  direct  effect  of  this  form  of  insurance  on  the  dimi- 
nution of  the  rate  of  pauper  burials,  once  exceedingly  high  in 
the  city  of  Newark,  we  find  evidence  in  the  official  returns,  for, 
taking  account  of  the  last  twenty  years,  there  has  been  a  very 
material  reduction  in  the  rate  of  burials  at  public  expense.  In 
1880,  when  The  Prudential  had  only  49,959  Industrial  policies 
in  force  in  the  State  of  New  Jersey,  the  rate  of  pauper  burials 
in  the  city  of  Newark  per  100,000  of  population  was  128,  while 
in  1899,  with  36.8  per  cent,  of  the  population  over  one  year  of 
age  insured  in  The  Prudential,  the  rate  was  only  93.  It  will 
be  apparent  that  in  this  direction  alone  the  Industrial  companies 
save  a  not  inconsiderable  amount  to  the  taxpayer  and  the  com- 
munity. 


3o8 


HISTORY   OF  THE   PRUDENTIAL. 


Pauper  burials  statistics  for  a  number  of  American  cities  for 
a  period  of  considerable  length  are,  unfortunately,  not  obtain- 
able ;  but  I  have  brought  together  the  returns  for  ten  principal 
cities,  which  have  been  consolidated  in  the  following  table.  The 
results  are  for  five-year  periods  for  the  twenty  years  1880-' 99, 
and  include  the  cities  of  New  York,  Boston,  Newark,  Cincinnati, 
Baltimore,  Indianapolis,  Minneapolis,  Cambridge,  Worcester 
and  Charleston,  S.  C.  The  table  indicates  a  constant,  though 
gradual,  decline  in  the  rate  of  pauper  burials  from  210  per 
100,000  during  1880-' 84  to  156  during  1895-' 99  :— 

PAUPER  BURIALS 
IN  TEN  AMERICAN  CITIES,  1880-1899. 


PERIODS. 

AGGREGATE  POPULA- 
TION OF  TEN  CITIES. 

AGGREGATE  NUMBER 
OF  BURIALS. 

RATE  PER  100,000. 

l88o   '84 

j-i   •i/ic:  24.8 

27  087 

2IO 

188^    '80 

jc  207  ^4^ 

2Q  74.7 

IQl 

l8QO    'Q4. 

17  623  68^ 

^u  180 

188 

i895-'99,'.   .... 

20,854,451 

32,614 

156 

Since  by  means  of  Industrial  insurance  frequent  provision  is 
made  for  dependent  widows  and  orphans,  we  should  also  expect 
a  decrease  in  the  cost  of  out-door  relief,  in  spite  of  the  fact  that 
' '  this  is  an  age  of  free  if  foolish  giving. ' '  In  Newark  during 
1880  the  cost  of  out-door  poor  relief  was  $29,818,  or  $0.22  per 
capita,  against  a  cost  of  only  $17,158  during  1898,  or  of  $0.07 
per  capita.  Had  the  rate  of  1880  prevailed  in  1898,  the  actual 
cost  to  the  taxpayers  would  have  been  $52,607. 

A  not  inconsiderable  share  of  this  reduction  must  be  credited 
to  the  Industrial  companies,  which  through  their  large  claim  dis- 
bursements, now  exceeding  $16,000,000  annually,  are  the  direct 
cause  of  a  vast  diminution  of  pauperism  and  want.*  Indirectly 
the  effect  of  the  system  is  to  be  traced  in  the  increased  habits  of 

*  A  typical  instance  of  the  direct  relation  of  Industrial  insurance  to 
public  welfare  is  furnished  by  a  case  referred  to  in  the  Orange  (N.  J.) 
Journal  of  December  2,  1899,  in  which  reference  is  made  to  the  death  of 
a  Mrs.  Ellen  Clark,  who,  on  account  of  illness,  had  for  more  than  two  years 
been  under  the  care  of  the  poor  authorities  and  the  management  of  the 
Memorial  Hospital.  The  item  concludes  with  the  statement  that  "the 
expenses  of  her  funeral  were  met  by  an  insurance  policy  which  had  been 
kept  in  force  by  a  charitable  woman." 


SUMMARY  OF   CONCLUSIONS  AND  RESULTS.  309 

savings  and  thrift  in  other  directions,  but  especially  in  the  growth 
and  development  of  savings  banks  and  building  and  loan  associa- 
tions. In  the  State  of  New  Jersey  there  were  73,052  depositors 
in  savings  banks  in  1880,  while  the  number  of  Industrial  policy- 
holders  was  only  49,959,  while  in  1899  tne  number  of  depositors 
had  increased  to  190,941,  against  an  increase  to  613,552  of  Indus- 
trial policy-holders  in  The  Prudential.  It  will  be  recalled  that 
in  1872,  before  the  organization  of  Industrial  companies,  the 
L/abor  Commissioner  of  Massachusetts  had  pointed  out  that  sys- 
tematic savings  among  working  people  were  the  exception  rather 
than  the  rule,  while  now  it  may  be  said  that  systematic  savings 
habits  are  the  rule  *  either  in  the  direction  of  deposits  in  banks 
or  payments  to  building  and  loan  associations,  and  this  result 
must  be  largely  attributed  to  the  missionary  work  of  Industrial 
companies,  like  The  Prudential,  teaching  the  masses  habits  of 
thrift  not  only  in  one,  but  in  many  directions. 

I  can  only  very  briefly  touch  upon  the  medical  statistics  of 
the  Company.  Naturally  in  a  branch  of  life  insurance  so  radically 
different  in  its  methods  and  extent  of  operations  from  Ordinary 
life  companies,  the  mortality  experience,  the  disease  and  accident 
occurrence  must  widely  differ  from  the  observed  experience  of 
companies  limiting  their  risks  to  adult  males  of  the  more  pros- 
perous elements  of  the  population,  and  as  regards  medical  exam- 
inations in  Industrial  insurance  they  are,  as  a  matter  of  course, 
less  rigid  than  is  the  case  in  Ordinary  life  insurance.  This  is 
shown  by  the  ratio  of  rejections  of  examined  Industrial  business 
(Prudential  experience  1899) ,  which  was  only  1.5  per  cent,  against 
a  ratio  of  15.5  per  cent,  in  Ordinary. 

In  other  words,  among  the  Industrial  class  of  risks  practi- 
cally all  applicants  are  accepted,  and  naturally  a  higher  mortality 


*  It  is  much  to  be  regretted  that  it  is  impossible  to  furnish  information 
as  to  the  average  number  of  deposits  per  annum  made  by  depositors  in 
American  savings  banks  at  the  present  time.  In  reply  to  an  inquiry 
addressed  to  the  Board  of  Commissioners  of  Savings  Banks  of  Massa- 
chusetts, I  am  informed  that  the  investigation  made  in  Massachusetts  in 
1872  was  the  only  instance  in  which  the  information  has  ever  been  given. 
The  considerable  growth  of  Dime  Savings  Banks  and  Penny  Provident 
Funds  during  the  past  twenty-five  years  would,  however,  give  direct  sup- 
port to  the  assertion  that  Industrial  insurance  has  been  directly,  as  well  as 
indirectly,  a  force  making  for  the  education  of  the  masses  in  habits  of  sys- 
tematic saving  of  small  sums  (ante,  p.  25). 


3io 


HISTORY   OF  THE   PRUDENTIAL. 


experience  must  result.  Dangerous  and  unhealthy  occupations 
are  not  discriminated  against,  as  is  evidenced  by  the  table  of  occu- 
pations showing  the  large  proportion  of  men  employed  in  mines, 
the  railway  service,  at  sea,  and  in  other  dangerous  occupations. 
These  occupations  are  subject  to  a  higher  mortality,  which  finds 
its  corresponding  result  in  higher  premium  rates.  The  table 
which  follows  has  been  limited  to  thirty  principal  causes  of  death 
observed  in  the  Industrial  experience  1891-1898,  and  is  only 
intended  as  evidence  confirming  facts  previously  stated  : — 

INDUSTRIAL   MORTALITY    EXPERIENCE   OF  THE   PRUDENTIAL 

INSURANCE  COMPANY. 
THIRTY  PRINCIPAL  CAUSES  OF  DEATH.     1891-1898. 


NUMBER. 


PKR  CENT.  OF 

TOTAL 
MORTALITY. 


Tubercular  Diseases, 36,107 

Pneumonia, 25,851 

Heart  Diseases, 16,881 

Bright's  Disease, 13,438 

Accidents, 10,343 

Diphtheria 9, 403 

Apoplexy, 9.228 

Cancer, 7,348 

Bronchitis, 7,  on 

Gastritis, 5,97* 

Meningitis, 5,526 

Typhoid  Fever, 4,837 

Croup  and  Laryngitis, 4,559 

Paralysis, 4,035 

Diseases  of  the  Liver, 4,012 

Diarrhoea  and  Dysentery, 3,821 

Scarlet  Fever, 2,711 

Peritonitis, 2,331 

Diseases  of  Women, 2,253 

La  Grippe, 2,234 

Old  Age, 2,062 

Convulsions, ,734 

Cholera  Infantum, ,721 

Suicide  and  Homicide, ,632 

Rheumatism, ,395 

Asthma,                ,274 

Malarial  Fever, ,160 

Dropsy,      ,104 

Insanity, ,084 

Pyaemia  and  Septicaemia, ,034 

All  other  causes, 25,058 

Total, 217,158 


16.63 
11.90 

7-77 
6.19 
4.76 
4-33 
4-25 
3-38 
3-23 
2-75 
255 
2.23 

2.10 

.86 

-85 

.76 

•25 

.07 

.04 

•03 

o.95 

0.80 

0.79 

o-75 
.0.64 

0-59 
o-53 
0.51 
0.50 
0.48 
n-53 


IOO.OO 


SUMMARY  OF  CONCLUSIONS   AND   RESULTS. 


The  most  important  cause  of  death  in  the  Industrial  mor- 
tality experience  of  The  Prudential  is  shown  to  have  been  con- 
sumption and  other  tubercular  diseases,  forming'i6.6  per  cent. 
of  the  total  mortality  from  all  causes.  Next  to  tubercular  diseases 
we  note  an  excessive  mortality  from  pneumonia,  responsible  for 
11.9  per  cent,  of  the  total  deaths.  The  proportion  of  deaths 
from  heart  diseases  and  Bright' s  disease  was  7.8  per  cent,  and 
6.2  percent.,  respectively,  while  accidents  were  responsible  for 
4.8  per  cent,  of  the  mortality  from  all  causes.  In  comparing  this 
mortality  experience  with  the  mortality  of  the  general  popula- 
tion, the  fact  must  not  be  lost  sight  of  that,  it  being  the  practice 
of  the  Company  to  accept  risks  on  all  healthy  lives  one  year  of 
age  and  upwards  to  the  year  seventy,  deaths  under  the  age  of 
one  are  not  represented  in  the  mortality  experience  of  the  Com- 
pany. The  age  distribution  of  the  mortality  is,  however,  fully 
disclosed  in  the  next  table,  showing  the  actual  and  relative 
numbers  of  deaths  at  various  groups  of  age  : — 

INDUSTRIAL  MORTALITY  EXPERIENCE.     1891-1898. 
WHITE  MAIZES  AND  FEMALJBS. 


PROPORTION  OF  DEATHS  AT  VARIOUS  AGES  IN  100  DEATHS  AT  ALL  AGES. 


AGES  AT  DEATH. 

MALBS. 

FEMALES. 

2-  4. 

13.6 

I^.i 

5-9  

IO—  14. 

6.6 

2C 

6.7 

27 

ic—  IQ 

37 

3Q 

2O—24. 

«;  6 

•7 

*  8 

2^—  2Q. 

6  7 

5  ' 

6  4 

•JO—  -1A 

70 

c  ft 

•2Z  —  T.Q 

68 

o*° 

5T 

4O-44 

6  * 

<X 

52 

45—  4Q 

s'6 
6  3 

«;  6 

50-54,            

CC  —  CQ 

7-1 

7.2 

5»w 

7.0 

7  8 

60-64 

7.8 

8  8 

65-60, 

6,0 

8  2 

5     "' 

5.Q 

7.7 

The  large  proportion  of  deaths  at  the  age  period  2-4  (both 
years  inclusive)  is,  of  course,  explained  by  the  fact  that  Indus- 
trial insurance  being  family  insurance,  children  of  ages  over  one 


3I2 


HISTORY  OF  THE   PRUDENTIAL. 


form  a  very  large  proportion  of  the  insured,  but  not  more  so  than 
in  the  general  population,  as  is  made  clear  by  comparative  data 
for  the  city  of  New  York,  where,  during  the  period  1891-1896, 
the  proportion  of  deaths,  ages  2-14  (both  years  inclusive),  was 
26.9  per  cent.,  against  23.4  per  cent,  for  The  Prudential. 
A  table  has  been  given  on  page  218  showing  the  actual 
mortality  experience  per  1,000  living,  for  children  under  ten 
years  of  age,  to  which  has  been  added  the  expected  mortality 
according  to  the  Farr  life  table,  on  which  the  premiums  of  the 
Company  are  calculated.  It  was  there  shown,  and  we  have  here 
additional  proof,  that  in  the  practice  of  insuring  children  for 
small  sums  no  unfavorable  factors  have  been  observed  in  the 
experience  of  the  Company. 

The  quarter-century  results  of  experience  in  business  man- 
agement are,  perhaps,  nowhere  better  brought  out  than  in  the 
vastly  improved  policy  conditions  of  the  Industrial  contract, 
to-day  practically  identical  in  all  essentials  with  the  contract  of 
Ordinary  policy-holders.  Briefly  stated,  the  results  of  years  of 
effort,  of  a  strong  sense  of  equity,  prudence  and  liberality,  are 
shown  in  the  following  statement  of  the  Industrial  policy  con- 
ditions in  1876  and  1900  : — 

EVOLUTION  OF  THE  INDUSTRIAL  POLICY  OF 
THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA. 


POLICY  CONDITIONS. 

1876 

1900 

Amounts  of  Insurance,  Age  10,  Premium  50. 
Benefit  during  first  3  months 

$100.00. 

No  liability. 

<  < 

<  < 
Voids  policy. 

Very  restricted. 
Restricted. 
No  provision. 

None. 

<  < 

$120.00. 

One-fourth. 
Full  liability. 

<  < 
<  < 

No  restriction. 

<  « 

After  2  years. 

"      3      " 

11      5      " 
"    15      " 

"      20        " 

Death  from  Consumption  during  ist  year, 
"      Heart  Diseases    "         "       " 
"     Suicide,         

"          "     Intemperance 

Hazardous  Occupations 

Residence 

Incontestability,   

Paid-up  Insurance    .               .       

Additional  Benefits      .                      

Cash  Dividends,    

Cash-Surrender  Values,      

The  great  value  of  these  concessions  and  the  removal  of 
many  burdensome  restrictions  cannot  be  adequately  estimated 
in  dollars  and  cents.  Still,  as  an  indication  of  the  financial 


SUMMARY  OF  CONCLUSIONS  AND   RESULTS. 


313 


importance  of  the  many  measures  introduced  during  the  past 
twenty  years,  it  is  but  proper  that  I  should  insert  a  brief,  even 
though  incomplete,  statement  as  to  the  cost  of  the  numerous 
concessions  made  voluntarily  by  The  Prudential  to  its  policy- 
holders  : — 

CONCESSIONS  MADE;  BY  THE  PRUDENTIAL,  INSURANCE  COMPANY  OF 
AMERICA  TO  ITS  INDUSTRIAL  POLICY-HOLDERS,  AND  THE  ESTI- 
MATED COST  OF  SAME  TO  JANUARY  i,  1900. 


CONCESSIONS. 

COST. 

Making  retroactive  the  increase  in  benefits  in  1886,  and  in 
Infantile  benefits  in  1806 

tr^o  ooo 

Granting  Paid-up  insurance  since  November,  1893,  on  poli- 
cies five  years  oW,  containing  no  agreement  for  same,  . 
Granting  Paid-up  insurance  from  July  i,  1898,  on  policies 
three   and  four  years  old,  containing  agreement  for 
Paid-up  insurance  after  five  years,      
Dividends  declared  since  January,  1897,  on  policies  con- 
taining no  provisions  for  dividends,  

*>OOIJ>*J«J«J 
I,O4O,OOO 

2O,OOO 

56^,804 

Allowing  new  policies  to  be  written  in  full  immediate 
benefit  if  original  policies  are  lapsed 

27  OOO 

Allowing  policies  that  have  been  lapsed  to  be  revived 
without  the  payment  of  arrears  in  premiums,  such  ar- 
rears being  a  non-interest  bearing  lien  on  the  policies, 

(Not  estimated.) 

Total  estimated  value  of  concessions 

$2  T  80  80  A 

Only  the  more  important  concessions  are  referred  to  in  this 
table.  Minor  concessions,  such  as  the  rule  under  which  the  first 
two  weeks'  premiums  are  returned  on  request  if  policy  is  not 
satisfactory,  the  removal  of  the  consumption  and  suicide  clauses, 
the  lien  clause  under  which  lapsed  policies  can  be  revived  with- 
out the  payment  of  arrears,  the  lien  bearing  no  interest,  and 
many  others  referred  to  in  other  parts  of  this  work,  cannot  be 
conveniently  calculated,  but  as  the  matter  stands  it  is  shown 
that  the  Company,  during  fourteen  years,  has  made  concessions 
to  policy-holders,  whose  original  contracts  did  not  provide  for 
privileges  offered  new  insurers,  to  the  extent  of  $2,180,894.  ^n 
other  words,  the  Company  never  advanced  a  step,  never  made 
a  distinct  improvement  in  its  policy  contract,  but  it  made  such 
privileges  and  improvements  retroactive  to  all  policy-holders, 


314  HISTORY   OF  THE   PRUDENTIAL. 

irrespective  of  the  fact  that  under  the  original  contracts  policy- 
holders  would  not  have  been  entitled  to  increased  benefits  in  one 
direction  or  another.  Does  not  this  account  for  the  fact  that 
The  Prudential  holds  so  high  a  place  in  public  esteem?  Is  it 
not  clear,  in  the  light  of  these  facts,  known  to  millions  of  our 
most  intelligent  working  people,  that  The  Prudential  has  been 
just,  has  been  liberal,  has  been  fair  in  its  dealing  with  the  masses, 
in  marked  contrast  to  the  shameful  betrayal  of  their  interests  in 
the  past  by  thousands  of  concerns  of  whatever  name,  trading 
under  the  title  of  insurance  organizations,  largely,  if  not  solely, 
for  the  purpose  of  personal  profit?  Of  all  the  beneficiaries  to 
whom  claims  were  paid  by  The  Prudential  during  1899,  approxi- 
mately 50  per  cent,  received  more  than  their  original  contract  called 
for.  Can  any  Ordinary,  any  Assessment,  any  Fraternal  Insur- 
ance Company  or  Society  point  to  a  similar  record  of  prudence, 
equity  and  liberality  ?  Where  so  much  has  been  done,  there 
need  be  no  doubt  but  that  still  further  and  still  greater  advance- 
ment will  be  made,  but  The  Prudential  will  ever  remain  loyal 
to  its  early  principles,  will  take  no  steps  which  are  not  based  on 
its  own  experience,  supported  by  observed  facts. 

These  summaries  and  brief  restatements  of  facts  previously 
touched  upon  cannot  fall  very  short  of  making  clear  the  vast 
extent  in  operations  and  far-reaching  economic  and  social  con- 
sequences of  this  form  of  life  insurance  in  the  United  States. 
They  will  make  clear  that  the  business  is  the  result  of  evolution- 
ary forces  making  for  ages  for  an  improved  system  of  protection 
against  the  most  immediate  and  socially  important  wants  of  the 
masses  ;  they  will  have  shown  that  Industrial  insurance  rests  on 
a  firm  foundation,  and  that  it  enjoys  the  highest  possible  confi- 
dence and  appreciation  on  the  part  of  millions  of  our  country's 
best  and  most  respected  class  of  industrial  workers  ;  that  it  in- 
cludes the  heroes  of  peace  as  well  as  of  war  ;  that  it  ministers  to 
the  wants  of  the  young,  the  middle  aged  and  the  old  ;  that  it  is 
national  in  its  scope  and  extent,  and  that  it  has  therefore  a  place 
in  the  social  and  political  economy  of  the  nation,  well  deserving 
of  the  most  serious  consideration  of  the  statesman,  the  economist, 
and  the  social  reformer.  It  has  been  shown  that,  from  the  stand- 
point of  public  policy,  this  system  is  worthy  of  State  approval  on 
the  ground  of  a  decrease  in  public  burdens  and  the  diminished 
need  of  private  charity  and  aid,  and  in  the  corresponding  increase 


SUMMARY  OF  CONCLUSIONS  AND   RESULTS.  315 

in  the  savings  habits  of  the  people  and  the  longer  life  which  must 
result  from  improved  conditions  of  social  life. 

Most  of  all  is  Industrial  insurance  deserving  of  public 
respect  and  consideration  in  a  Republic  where  the  will  of  the 
majority  is  law,  where  the  wishes  of  the  masses  are  respected, 
where  measures  and  tendencies  meeting  with  extensive  public  ap- 
proval are  looked  upon  as  evidences  of  progress  in  the  direction  of 
a  higher  and  better  life.  The  verdict  of  the  masses,  of  the  best  ele- 
ments of  our  industrial  population,  is  certainly  in  favor  of  this  form 
of  insurance.  However  humble  this  struggle  on  the  part  of  the 
working  people  to  improve  the  conditions  of  their  social  and  family 
life,  the  results,  in  the  aggregate,  are  of  almost  stupendous  propor- 
tion ;  and  who  will  say  that  it  is  not  true  in  this  particular,  as  it 
has  been  pointed  out  by  Mr.  Lecky  to  be  true  in  general,  that  "  It 
is  *  *  #  *  Industrialism  that  has  brought  into  the  world 
that  strong  sense  of  the  moral  value  of  thrift,  steady  industry, 
punctuality  in  observing  engagements,  constant  forethought  -with 
a  view  of  providing  for  the  contingencies  of  the  future,  which  is 
now  so  characteristic  of  the  moral  type  of  the  most  civilized 
nations. ' ' = 

Limited  in  space  and  time,  I  have,  no  doubt,  fallen  short  in 
my  aim  to  produce  a  work  useful  to  the  student  of  economics 
and  social  problems,  a  work  which,  while  in  a  measure  the 
history  and  record  of  events  relating  to  The  Prudential  Insur- 
ance Company  of  America,  is  yet  largely  the  history  and 
record  of  events  relating  to  the  business  as  a  whole.  While  I 
cannot  have  answered  all  of  the  many  questions  relating  to  the 
business  which  have  in  times  past  assumed  more  or  less  public 
importance,  still,  every  effort  has  been  made  to  meet  reasonable 
expectation  by  a  full  and  detailed  treatment  of  the  most  important 
points  of  controversy.  If  it  is  said  that  a  statement  of  the  facts 
coming  from  one  actively  employed  in  the  business  of  Industrial 
insurance  must  needs  fall  short  of  the  highest  requirements  of 
critical  examination,  the  answer  is  that  the  writer  has  kept  in 
mind  the  well-known  expression  of  Th.  Ribot,  that  "It  is  a 
complete  mistake  to  suppose  that  what  is  not  true  can  be  scien- 
tifically established,  "f  and  with  these  words  of  proper  caution  I 

*  The  Map  of  Life,  p.  53. 

f  Heredity,  p.  183.     Appleton  &  Co.,  N.  Y.,  1891. 


316  HISTORY   OF  THE   PRUDENTIAL. 

have  approached  my  task,  and  trust  that  I  have  done  the  under- 
taking justice.  At  least,  I  have  added  to  the  rather  limited  body 
of  available  information  relating  to  life-insurance  practice  and 
results  a  work  containing  the  record  of  one  institution  to  which 
the  industrial  population  of  this  country  is  indebted  for  a  new 
form  of  insurance,  which  has,  forever,  done  away  with  the  former 
crude  and  primitive  types  of  so-called  insurance  societies  and 
attempts  to  transact  on  the  ancient  basis  of  status  a  highly  com- 
plex and  intricate  form  of  business  enterprise,  a  business  resting 
on  recognized  laws  of  human  mortality  and  finance  and  possible 
of  successful  operation  only  on  the  basis  of  contract,  the  founda- 
tion principle  of  modern  social  life. 

Years  of  personal  experience  in  the  field  of  actual  business 
operations,  personal  contact  with  hundreds  of  thousands  of  our 
working  population  of  all  nationalities  in  various  parts  of  the 
country,  have  convinced  me  that,  after  all  that  has  been  said  and 
written  on  the  progress  of  the  masses  during  the  past  fifty  years, 
but  scant  justice  has  been  done  the  people  in  the  fully  deserved 
recognition  of  their  efforts  to  improve  the  conditions  of  their  daily 
life  in  a  manner  and  a  way  most  likely  to  bring  about  the  realiza- 
tion of  their,  perhaps  indefinite,  yet  strong  and  worthy,  aims. 
There  are  those  who  think  little  of  what  the  workingman  does  for 
himself,  who  think  that  most  of  their  progress  and  improvement 
is  the  result  of  charitable  or  philanthropic  efforts,  but  I,  for  one, 
share  no  such  views.  Years  of  experience  have  forced  upon  me 
the  conviction  and  belief  that  the  working  people  can  be  trusted 
in  matters  pertaining  to  the  solution  of  their  own  problems,  and 
that  they  will  accomplish  more  by  agencies  of  their  own  than  by 
artificial  agencies  devised  by  others. 

In  the  true  and  emphatic  words  of  Mr.  Herbert  Spencer, 
' '  Which  is  the  more  misleading,  belief  without  evidence,  or 
refusal  to  believe  in  presence  of  overwhelming  evidence  ?  ' '  and 
"If  there  is  an  irrational  faith  which  persists  without  any  facts 
to  support  it,  there  is  an  irrational  lack  of  faith  which  persists 
spite  of  the  accumulation  of  facts  which  should  produce  it  ; 
and  we  may  doubt  whether  the  last  does  not  lead  to  worse 
results  than  the  first."*  I  feel  convinced  that  the  facts  here 
brought  together  will  lead  those  who  for  the  first  time  learn  of 

*  The  Ethics  of  Social  Life,  Part  IV.,  g  133. 


SUMMARY  OF   CONCLUSIONS   AND   RESULTS.  317 

the  vast  extent  of  Industrial  insurance,  and  the  far-reaching 
results  which  have  been  accomplished  through  the  work  of  The 
Prudential  and  other  Industrial  companies,  to  seriously  consider 
whether  this  form  of  thrift  and  evidence  of  a  healthy,  robust 
struggle  for  economic  independence,  on  the  part  of  millions  of 
working  people,  is  not  more  deserving  of  approval  and  respect  and 
sympathetic  consideration  than  the  many  and  far  more  costly 
eiforts  to  ameliorate  the  condition  of  the  people  by  artificial  means 
through  the  medium  of  public  or  private  charitable  agencies. 
In  simple  justice  to  the  wage-earners  of  this  country,  I  feel  con- 
vinced that  never  were  words  of  Mr.  Spencer  more  applicable 
to  the  affairs  of  daily  life  than  in  the  following  sentence,  deserv- 
ing to  be  engraved  on  the  mind  and  memory  of  all  who  have  the 
best  interests  of  the  masses  at  heart  : — 

"The  average  legislator,  equally  with  the  average  citizen, 
has  no  faith  whatever  in  the  beneficent  working  of  social  forces, 
notwithstanding  the  almost  infinite  illustrations  of  this  beneficent 
working.  He  persists  in  thinking  of  a  society  as  a  manufacture 
and  not  as  a  growth  :  blind  to  the  fact  that  the  vast  and  complex 
organization  by  which  its  life  is  carried  on,  has  resulted  from  the 
spontaneous  co-operations  of  men  pursuing  their  private  ends. 
Though,  when  he  asks  how  the  surface  of  the  Earth  has  been 
cleared  and  made  fertile,  how  towns  have  grown  up,  how  manu- 
factures of  all  kinds  have  arisen,  how  the  arts  have  been  de- 
veloped, how  knowledge  has  been  accumulated,  how  literature 
has  been  produced,  he  is  forced  to  recognize  the  fact  that  none 
of  these  are  of  governmental  origin,  but  many  of  them  have 
suffered  from  governmental  obstruction  ;  yet,  ignoring  all  this, 
he  assumes  that  if  a  good  thing  is  to  be  achieved,  or  an  evil 
prevented,  Parliament  must  be  invoked.  He  has  unlimited  faith 
in  the  agency  which  has  achieved  multitudinous  failures,  and  has 
no  faith  in  the  agency  which  has  achieved  multitudinous  successes.  "* 

It  was  this  clear  recognition  of  social  and  economic  laws  and 
forces  which  made  it  possible  for  Mr.  John  F.  Dryden  to  com- 
pletely realize  his  early  ambition,  and  succeed  in  the  laudable 
endeavor  to  make  a  success  of  Industrial  insurance  and  The 
Prudential  Insurance  Company  of  America.  And  nowhere,  to 
my  knowledge,  has  this  been  stated  more  clearly  and  precisely 

*  The  Ethics  of  Social  Life,  Part  IV.,  §  133. 


318  HISTORY   OF   THE   PRUDENTIAL. 

than  in  Mr.  Dry  den's  own  words,  in  his  presidential  address  at 
the  reunion  of  officers  and  agents  on  January  10,  1900,  than  which 
I  can  select  none  better  to  conclude  this  sketch  of  the  ' (  History 
of  The  Prudential  Insurance  Company  of  America  ' '  : — 

"This  is  a  wonderful  business,  gentlemen,  in  which  you  are 
engaged.  I  speak  of  it  now  not  from  the  confines  of  The  Pru- 
dential's work,  but  from  that  great,  broad  arena  which  compre- 
hends the  whole  scheme  of  life  insurance,  and  may  be  found  in 
operation  in  every  country  of  the  civilized  world — a  business  with 
a  noble  history,  a  business  with  a  lofty  aim,  a  business  with  a 
magnificent  purpose,  a  business  with  splendid  results.  Like 
most  good  and  enduring  things,  its  birth  was  humble  and  early 
advancement  difficult.  Originating  back  in  remote  antiquity,  it 
has  moved  forward  by  slow  stages,  but  in  regular  gradation,  until 
to-day  it  stands  upon  a  solid  basis  and  challenges  the  admiration 
of  the  whole  world.  It  could  not  be  removed  from  the  great 
scheme  of  the  social  and  political  economy  of  our  civilization 
without  bringing  a  disaster  upon  the  human  race  which  no  man 
can  foresee  or  measure,  and  that  particular  part  of  the  plan,  gen- 
tlemen, which  has  from  its  beginning  characterized  the  history  of 
The  Prudential  is  more  marvelous  than  all  the  others. 

"  Taking  its  root  in  human  affection,  in  that  lofty  desire  to 
provide  for  one's  own,  the  germ  of  it  lying  back  out  of  our  sight, 
even  before  recorded  history  began,  it  has  gone  on  by  a  process 
of  evolution — first  the  gild,  then  the  burial  societies,  then  the 
friendly  societies — until  at  last  it  has  been  placed  upon  an  immu- 
table and  scientific  foundation,  and  we  have  the  Industrial  insur- 
ance company.  An  Industrial  company  like  The  Prudential 
offers  to  the  people  a  perfected  and  well-rounded-out  scheme  of 
life  insurance,  in  that  it  places  its  blessings  within  the  reach 
of  all  classes,  male  and  female,  rich  and  poor  alike.  It  is  the. 
highest  development  of  life  insurance  in  existence. ' ' 


INDEX. 


319 


INDEX. 


PAGE. 
A 

A,  B,  C  of  life  insurance,  Indus- 
trial insurance  the,  190 

Administration  of  agencies,   .    .    .  270 

Adult  rate  table,  five-hundred  dol- 
lar, 126  ;  colored,  138 ;  1896,  .  228 

Advertisement  of  The  Prudential, 
the  Rock  of  Gibraltar,  .  .  267 

American  Exchange  and  Re- 
view on  paid-up  Industrial 
policies, 188,  189 

Arena,  Industrial  insurance  dis- 
cussed in  the, 190,  191 

Adverse  legislation  (see  Children, 
Negroes,  Surrender  value). 

Agency  system  dispensed  with,    .    59 

Agents,  life  insurance,  a  necessity, 
I4»  59.  86;  praise  of,  14,  231, 
249,  263,  265,  268  ;  to  their  in- 
terest to  prevent  lapses,  123 ; 
importation  of  English  Indus- 
trial, by  Metropolitan,  132  ;  In- 
dustrial, as  insurance  teachers, 
148 ;  class  of  men  employed 
as,  149,  271  ;  fraudulent  Indus- 
trial, 149 ;  ex-,  an  injury  to 
companies,  149 ;  liberal  treat- 
ment of  Prudential,  156 ;  diffi- 
culties of  Industrial,  169 ;  new 
terms  to  Prudential,  184 ;  In- 
dustrial-Ordinary, 231,  242 ; 
faithful  Prudential,  232,  233 ; 
inducement  to,  238;  instruc- 
tion of,  240  ;  evidence  of  good 
character  of,  241  ;  position  of 
Industrial,  241 ;  evidence  of 


PAGE. 

confidence  in,  257,  261  ;  Phil- 
lips Brooks  on,  263  ;  straight 
canvassing,  269 ;  management 
of,  270,  271 ;  loyalty  of  the 
Prudential,  282 ;  number  of, 
in  the  Prudential  force,  1885- 
1900,  300. 

Ages,  proportion  of  deaths  at 
early, 311,  312 

Ages  at  death  in  the  Prudential's 
experience,  1891-1898,  .  .  .  .311 

Aid  Societies  in  New  York  State, 
1848-1866, 16 

Aldcroft,  W.  H.,  on  Industrial 
insurance, 223 

Alexander,  Mrs.  L.  F.,  on  Indus- 
trial insurance,  280 

American  Humane  Association, 
misstatement  in  report  of  the,  200 

American  Life  Insurance  Compa- 
ny, of  Philadelphia,  Industrial 
business  of  the, 167 

American  Manual  of  Life  Insur- 
ance, The 8 

American  Popular  Life,  weekly 
premium  payment  plan  of  the,  21 

Amounts  of  insurance,  Prudential 
Friendly  Society, 83 

Assets  of  The  Prudential,  i876-'99,  298 

Assets,  investment  of, 299 

Anglo-Saxon  thrift  defined,    ...      4 

Anniversary,  Tenth,  of  The  Pru- 
dential,   156 

Annuities,  Industrial, 100 

Application  form,  new, 240 


320 


INDEX. 


PAGE. 

Applications,  to  The  Prudential 
Friendly  Society,  analysis  of 
first  1,000, 79-83 

Approval,  of  Industrial  Insurance, 
previous  to  1875,  53  ;  by  insur- 
ance journals,  130,  147 ;  offi- 
cial, 119, 134.  135,  155,  160,  161, 
180,  199,  206,  223,  224,  263,  273- 
276  ;  general,  158, 159,  180,  221, 
264,  268,  278 ;  public,  196-198, 
216,  217,  276,  277,  281  ;  legis- 
lative, in  Colorado  and  Ohio, 
281. 

Army  and  Navy,  permit  to  Pru- 
dential policy-holders  to  serve 
in, 254,  255 

Arrears,  notification  of  persons  in, 
123  ;  allowed  delinquents,  244. 

Association,  the  principle  of,  6  ; 
perversion  of  the  principle  of, 
19. 

Assurance  Associations,  Parlia- 
mentary Report  on, 5 

Attacks  on  Industrial  insurance, 
145 ;  by  ex-agents,  149 ;  by 
newspapers,  150,  199,  200 ;  in 
Colorado,  198  ;  nature  of,  206, 
207;  in  1895,  213;  in  Massa- 
chusetts, 217,  229,  230  (see 
also  Negroes,  Children,  Sur- 
render value). 


Baltimore  Underwriter,  on  Indus- 
trial insurance,  178;  on  The 
Prudential,  195,  196,  247,  248. 

Barry,  Dr.  Mary  F.,  approval  of 
Industrial  insurance, 281 

Bartels,  Arthur,  effort  to  pass  Col- 
orado House  Bill  No.  317,  .  .272 

Bassett,  Allen  L.,  first  president  of 
The  Prudential  Friendly  Soci- 
ety, 70 ;  and  the  Industrial 
Insurance  Company  of  the 
United  States,  114,  115. 


PAGE. 

Beade,  Rev.  J.  B.,  on  Industrial 
insurance, 9 

Beneficence  of  Industrial  insur- 
ance (see  Value  of). 

Benefit,  public,  of  Industrial  in- 
surance (see  Value  of). 

Benefit  societies,  fallacies  of,    .    .  131 

Benefits,     additional,    after    five 

•    years,  236  ;  value  of,  increased 

by  The  Prudential,  313,  314. 

Bettle,  Hon.  Wm.,  on  Industrial 
insurance, 273 

Blanchard,  Noah,  president  of  The 
Prudential  Insurance  Co.  of 
America,  70;  death  of,  144, 145. 

Board  of  Trade,  Newark,  investi- 
gation of  Industrial  insurance 
by  the, 91 

Bonds,  reduced  fees  for  agents', 
241  ;  agents',  no  longer  re- 
quired, 252. 

Booth,  Chas.,  on  Industrial  insur- 
ance,   164 

Boston  Herald,  on  mass  insurance, 
12  ;  on  Industrial  insurance, 
178-180;  on  life  insurance  of 
children,  179 ;  on  adverse  legis- 
lation, 229. 

Boston  Standard,  on  Butler'sattack 
on  Industrial  insurance,  150;  on 
life  insurance  of  children,  172 ; 
on  The  Prudential,  191,  192. 

Bradley,  Mrs.  Annie  B.,  on  Indus- 
trial insurance, 279 

British  Industry,  the, 9 

Brooks,  Phillips,  on  life-insurance 
agents, 263 

Bund  plan,  a  failure,  27,  103  ;  of 
the  Metropolitan,  28,  102 ;  of 
the  New  York  Life  Insurance 
Co.,  28,  29;  of  the  Western 
New  York  Life  Insurance  Co., 
29;  of  the  Life  Insurance  As- 
sociation of  America,  29 ;  of 
life  insurance,  38  ;  opposed  by 
the  Insurance  Times,  39,  67  ; 
of  the  Prudential  League,  89. 


INDEX. 


32I 


PAGE. 

Burial,  decent,  of  the  dead,  4  ;  the 
object  of  Industrial  insurance, 
4,  143- 

Burial  clubs  among  the  English,  .      5 

Burial  expenses,  primary  object 
of  Industrial  insurance,  ....  4 

Burial  insurance  a  necessity,  ...    32 

Burials  of  paupers  (see  Pauper 
burials). 

Burnett,  Dr.,  tribute  to  John  F. 
Dryden,  .  .  no 

Butler,  Ben j.,  attack  on  Industrial 
insurance,  149  ;  on  the  life  in- 
surance of  children,  149,  150. 


Camden  Daily  Telegram  on  The 
Prudential,  ....  266,  267 

Canvassers,  advertisement  for,  .  86,  87 

Canvassing,  straight,  advocated  in 
1853,  12  ;  method  of,  250. 

Capital,  increase  of  Prudential's,  192 

Carlstadt  Freie  Presse  on  The 
Prudential, 143 

Charitable  institutions,  R.  T.  Ely 
on,  41  ;  not  in  touch  with  in- 
dustrial conditions,  151. 

Charitable  relief  and  Industrial 
insurance, 307,  308 

Charities,  Associated,  of  Boston, 
on  Industrial  insurance,  .  278,  290 

Charity,  W.  G.  Sumner  on,  41  ; 
life  insurance  not,  34,  41,  144, 
203  ;  Industrial  insurance  not, 
34,  144,  203  ;  vs.  Industrial  in- 
surance, 203. 

Charity  Organization  Society,  of 
Philadelphia,  on  Industrial  in- 
surance,   172 

Charity  Society  of  Louisville  on 
Industrial  insurance, 216 

Chicago  Relief  and  Aid  Society, 
Fortieth  Report,  reference  to 
Industrial  claim  payment,  .  .  290 

Child  Endowment,  policies  issued 
by  The  Prudential,  192 ;  ex- 
plained, 192,  193. 

Child  Insurance,  a  misnomer,    .    .  120 


PAGE. 

Child  life,  value  of,  attempt  to 
determine,  .  198 

Child  mortality,  its  causes,  32  ;  in 
New  York  City,  32  ;  excessive 
prior  to  1875,  55,  56 ;  in  New- 
ark, N.  J.,  55,  130. 

Child  murder  for  insurance  money 
denied,  179,  206  (see  also  Ap- 
proval). 

Children,  insured,  mortality  of, 
218  ;  claims  paid  on,  219. 

Children,  insurance  of,  early  in- 
stance of,  8  ;  first  American  at- 
tack on,  10  ;  explanation  of,  72, 
1 20,  179  ;  a  legitimate  business, 
120  ;  charges  against,  128;  aver- 
age amounts  of  policies,  128, 
150 ;  parliamentary  investiga- 
tion of,  in  England,  129 ;  attack 
on,  150,  213 ;  expert  opinion 
on,  159;  officially  approved, 
161,  206,  273,  276;  agitation 
on  the,  172  ;  objects  of  the, 
179  ;  attempt  to  prohibit,  182, 
184,  198  ;  legislative  investiga- 
tion of,  182  ;  legal  recognition 
of,  183  ;  perversion  of  facts  as  to 
the,  207  ;  premium  limit,  226, 
227 ;  effort  to  regulate,  272, 
273 ;  not  contrary  to  public 
policy,  273,  280;  favored  by 
Denver  citizens,  279-281 ;  ap- 
proved by  Ohio  Legislature, 
281  (see  also  Approval). 

Chronicle,  The,  on  insurance  edu- 
cation, 148;  on  surrender  value 
of  Industrial  policies,  171. 

Civilization  and  life  insurance,  .    .  318 

Claflin,  Governor,  of  Massachu- 
setts, report  on  depositors  in 
savings  banks,  1870, 25 

Ckims,  method  of  paying,  The 
Prudential  Friendly  Society's, 
71,  76,  77  ;  immediate  payment 
of,  162,  163,  257  ;  amounts  of, 
paid  by  The  Prudential,  1876- 
1885,  163;  improved  method 
of  paying,  257. 


322 


INDEX. 


PAGE. 

Clark,  John  E.,  Consulting  Actu- 
ary of  The  Prudential  Friendly 
Society,  61 ;  actuarial  data  of, 
77  ;  on  surrender  values,  87. 

Clark-Dryden  correspondence,  .    .    61 

Clarke,  Julius  B.,  advocates  Indus- 
trial insurance  in  Massachu- 
setts,   48 

Class  insurance,  in  1859,  13;  by 
Ordinary  companies,  105. 

Class  of  people  insured,  in  The 
Prudential,  .  .  194,  301,  302,  303 

Clerical  force  of  The  Prudential, 
1885-1900,  300 

Coal-miners,  native,  accepted  by 
The  Prudential, 246 

Code,  telegraphic,  for  claim  pay- 
ments,   258 

Collector,  a  necessity  in  Industrial 
insurance, 261,262 

Collins,  J.  B.,  on  life  insurance  vs. 
savings  banks, n 

Collins,  J.  F.,  117  ;  death  of,  231 ; 
sketch  of,  232. 

Color  line  in  life  insurance  (see 
Negroes), 137 

Colorado,  insurance  of  children 
prohibited  in,  198  ;  law  of  1893 
unconstitutional,  208  ;  Insur- 
ance Department  of,  on  Indus- 
trial insurance,  199,  208 ;  effort 
to  repeal  law  of  1893,  272  ;  In- 
surance Commissioner  of,  on 
Industrial  insurance,  276;  Leg- 
islature of,  in  favor  of  Indus- 
trial insurance,  281 ;  attempt 
to  repeal  the  law  of  1893,  a 
failure,  281. 

Companies,  organization  of  new 
Industrial 100 

Competition,  evil  effects  of,  ex- 
cessive  133,  146,  181,  184 

Complaints,  rarity  of,  against  In- 
dustrial insurance,  .  .  .  135,  152 

Concessions,  to  policy-holders, 
made  by  The  Prudential,  154, 
187,  195-197.  214,  215,  227, 


PAGE. 

228,  235-238,  312,  313  ;  made 
retroactive,  237  ;  expected  re- 
sult of,  238  ;  cost  of  Prudential, 
239.  3J3  J  review  of,  248,  249. 

Confidence,  public,  in  The  Pru- 
dential,   253,  314 

Connecticut,  Insurance  Commis- 
sioner of,  on  Industrial  insur- 

.     ance, 160,  223,  275 

Conservative  policy  of  The  Pru- 
dential,   158 

Consumption  clause,  in  the  Pru- 
dential policy,  155  ;  removed, 
229. 

Contract,  the  Industrial,  of  The 
Prudential 312 

Co-operation,  R.  T.  Ely  on,  18 ; 
Herbert  Spencer  on,  18. 

Co-operative  insurance  associa- 
tions, based  on  false  principles, 
19  ;  frequency  of  failure  of,  33. 

Co-operative  insurance,  fallacies 
of,  1 8 ;  determining  features 
of,  27 ;  condemned,  33 ;  vs. 
Industrial  insurance,  51,  131, 

143- 

Cost,  in  Industrial  insurance,  dis- 
cussion of,  50 ;  of  Prudential 
concessions,  1886-1900,  313. 

Customs,  ancient  origin  of  pres- 
ent-day,    4 


Deaths,  thirty  principal  causes  of, 
in  the  Prudential's  experience, 

1891-1898,  310 

Debit,  definition  of, 269 

Definition  of  Industrial  insurance, 
3 ;  of  life  insurance,  34 ;  of 
debit,  269. 

Demand  for  Industrial  insurance, 
35.  37.  42,  50,  51.  53,  84,  85, 
92,  96,  98,  no,  in,  178,  253, 
286. 

Demolins,  E.,  on  thrift 4 

Denver  citizens  on  Industrial  in- 
surance   279-281 


INDEX. 


323 


PAGE. 

Denver  Times  on  Industrial  in- 
surance,    199,  200 

Devine,  E.  T.,  on  morals  and  eco- 
nomics,    ...  286 

Disbursements  to  Prudential 
policy-holders,  1876-1899,  .  297 

Diseases,  excessive  prevalence  of, 
previous  to  1875,  55  ;  mortality 
from  principal,  in  The  Pru- 
dential, 310,  311. 

Discrimination  against  negroes, 
laws  prohibiting,  153,  159,  185 
(see  also  Negroes). 

Dividends,  on  Special  Adult  poli- 
cies, 182,  215  ;  cash,  after  fif- 
teen years,  237  ;  cash,  method 
of  payment  of,  261. 

Drake,  W.  R.,  first  applicant  to 
The  Prudential  Friendly  So- 
ciety,   58,  79 

Dryden,  Forrest  F.,  elected  Secre- 
tary of  The  Prudential,  ...  183 

Dryden,  John  F.,  founder  of  The 
Prudential,  I  ;  student  of  in- 
surance problems,  52,  57  ;  vis- 
its Newark,  1873,  56  ;  and  the 
Widows'  and  Orphans'  Friend- 
ly Society,  57,  no;  influence 
on,  of  Gladstone  and  Wright, 
57 ,  knowledge  of  insurance 
principles,  60 ;  correspondence 
with  J.  E.  Clark,  61  ;  courage 
and  energy  of,  68 ;  elected 
President  of  The  Prudential, 
70,  145  ;  visit  to  England,  94 ; 
Spectator  on,  115,  145;  on 
first  infantile  rate  table,  121 ; 
circular  on  lapses,  124  ;  on  Im- 
mediate Benefit  Concession 
to  policy-holders,  125  ;  on  life 
insurance  of  negroes,  137 ;  on 
expense-rate,  139 ;  on  lapse 
question,  139 ;  on  Prudential 
history,  156 ;  on  Prudential 
progress,  166,  248,  249 ;  tribute 
to,  no,  167;  on  Industrial  in- 
surance as  an  educator,  193, 


PAGE. 

194;  on  the  panic  of  1893, 
195 ;  argument  before  the 
Colorado  Legislature,  198, 
199 ;  on  insurable  interest, 
198,  199 ;  statement  before  the 
Insurance  Committee  of  Mas- 
sachusetts, 218,  219,  222;  ad- 
dress of,  1896,  230 ;  on  Indus- 
trial-Ordinary insurance,  230 ; 
Presidential  elector,  230;  letter 
on  concessions,  235-238;  on 
Prudential  agents,  242 ;  on 
revivals,  242,  243 ;  address  by, 
at  Prudential  banquet,  1898, 
252,  253 ;  letter  on  war  risks, 
254,  255 ;  letter  to  the  field 
force,  265  ;  tribute  to  Superin- 
tendent Egenolf,  282 ;  tribute 
to  Superintendent  W.  F.  Law- 
son,  283  ;  recognition  of  social 
forces,  317 ;  address  of,  January 
10,  1900,  318. 

Duty,  life  insurance  as  a,    ....    13 
Dykeman,  C.  V.,  Superintendent, 
anniversary  of 283 


Economic  aspects  of  Industrial  in- 
surance, 68,  198,  284,  286,  287, 
3i5,  3l6- 

Eddy,  H.  H.,  Insurance  Commis- 
sioner of  Colorado, 273 

Educational  value  of  Industrial 
insurance,  13,  14,  45,  105,  148, 
178,  190,  191,  193,  194. 

Egenolf,  P.,  Superintendent,  an- 
niversary of, 282 

Eichbauer,  Frederick,  death  of,    .  232 

Ely,  Richard  T.,  on  scope  of  Po- 
litical Economy,  2 ;  on  co- 
operation, 18;  on  charitable 
institutions,  41 ;  on  life  insur- 
ance, 284. 

Emigration,  English,  influence  of, 
on  American  Industrial  insur- 
ance  33 


324 


INDEX. 


PAGE. 

Employees,  insurance  of  Mont- 
gomery Ward  &  Co.'s,  in  The 
Prudential,  268 ;  insurance  of 
Ithaca  Daily  News' ,  in  The  Pru- 
dential, 268. 

Employees,  Prudential,  number 
of,  156;  in  1886,  167;  1885- 
1900,  300. 

Endowment  policies,  Industrial, 
issued  by  The  Prudential,  189  ; 
for  children,  explained,  192, 193. 

England,  surrender  value  in,   .    .  296 

English,  Stephen,  on  Industrial 
insurance,  31  ;  reply  to  Elizur 
Wright,  47  (see  Insurance 
Times). 

Entz,  J.  F.,  on  mass  insurance,  23, 
24 ;  organized  the  Progress  L,if  e 
and  Savings  Insurance  Co.,  24  ; 
on  family  insurance,  24. 

Equity,  the  basis  of  the  Pruden- 
tial contract,  88 ;  evidence  of 
Prudential,  228;  the  underly- 
ing principle  of  The  Pruden- 
tial, 253. 

Evans,  J.  C.,  Colorado  State  Sen- 
ator, on  Industrial  insurance,  277 

Evolution,  in  life-insurance 
methods,  84  ;  of  the  Prudential 
Industrial  policy,  1876-1900, 
154,  312  ;  of  Industrial  insur- 
ance, 164,  165,  314,  318;  of 
Industrial-Ordinary  insurance, 

259- 

Examination,  official,  of  The  Pru- 
dential,   204 

Exchange  and  Review,  the,  on 
life  insurance,  22,  23  ;  on  the 
Bund  or  Union  plan  of  life 
insurance,  27. 

Expense-rate  in  Industrial  insur- 
ance,   50,  62,  139,  140 

Experience,  necessary  for  im- 
proved tables,  61 ;  the  guide  of 
The  Prudential,  239. 

Experiment  in  the  issue  of  Indus- 
trial policies, 259,  260 


PAGE. 

Extension,  of  business  operations 
of  The  Prudential,  142  ;  of  in- 
surance principles  to  the  mas- 
ses, 159. 

Extent  of  Industrial  insurance, 
world-wide 200,  284 


Fackler,  D.  P.,  examination  of  the 
N.  J.  Mutual  by,  99 ;  examina- 
tion of  The  Prudential,  118; 
on  Industrial  insurance,  223, 
224. 

Fallacies,  life  insurance, 17 

Familien  Schutz,  Bund  plan  of  in- 
surance,   29 

Family  Bank  plan  of  insurance, 
advocated  by  Elizur  Wright, 
43  ;  failure  of,  44. 

Family  insurance,  need  of,  24, 
306  ;  Insurance  Commissioner 
Clarke,  of  Massachusetts,  on, 
49;  approved,  85;  demand 
for,  86 ;  official  approval  of, 
152,  275. 

Farr's  English  Life  Table  com- 
pared with  Prudential's  expe- 
rience,   218 

Financial  condition  of  The  Pru- 
dential, in  1879,  n8;  New  Jer- 
sey official  report  on,  204  ;  sta- 
tistics of,  298,  299. 

Financial  value  of  Prudential's 
concessions, 313 

Five-Hundred-Dollar  Adult  Rate 
Table,  first, 126 

Foreign-born  Industrial  policy- 
holders  in  The  Prudential,  .  .  302 

Fortuna  Life  Insurance  Society, 
The,  28 

Foundation,  solid,  of  The  Pruden- 
tial,   267 

Fraternal  insurance  vs.  Industrial 
insurance, 143 

Fraternal  Orders,  inherent  defects 
of,  7 ;  membership,  106 ;  fal- 
lacies of,  131. 


INDEX. 


325 


PAGE. 

Friendly  Society,  an  American,    .  HI 
Friendly  Societies,  early,  5  ;  Roy- 
al Commission  on,  30,  34;  fre- 
quency of  failure  of,  33;  and 
Industrial    insurance,   48,   49 ; 
and  American  Industrial  insur- 
ance companies,  50;  Neison 
and  RatclifFe  on,  60 ;  in  1875,  78. 
Fuel  Saving  Society  of  Philadel- 
phia,           8 

Funeral  insurance,  Walford  on,     .    35 
Funeral  insurance  companies,  35,  174 
Funeral  rites,  importance  of,     .    .      4 
Funerals,  extravagance   of,  1875, 
66  ;  expenses  of,  first  object  of 
Industrial  insurance,  76 ;  cost 
of,  in  Newark  and  New  York, 
219,  220. 


Germania  Life  Insurance  Co.,  In- 
dustrial business  of  the,  .  .  .161 

Germans,  Industrial  insurance  ap- 
proved by,  143  ;  as  insurance 
risks,  302,  303. 

Germany,  Industrial  insurance  in,  303 

Gibraltar,  rock  of,  ....  58,  119,  267 

Gilds,  of  the  middle  ages,  5 ; 
destruction  of,  by  Henry 
VIII.,  5. 

Gladstone,  on  post-office  insur- 
ance, 16 ;  attack  of,  on  the 
British  Prudential,  46. 

Government  insurance,    ...      16,  35 

Greene,  Jacob  L. ,  on  the  first  duty 
of  a  life  company, 296 

Guizot,  criticism  of  English 
thought, 2 

Gummere,  on  early  importance 
of  funeral  rites, 4 

H 

Hadley,  A.  T.,  on  individual 
responsibility, 221 

Hadley,  H.  H.,  and  the  Peabody 
Life,  36  ;  experiments  in  life 
insurance, 36 


PAGE. 

Haggart,  Thos.,  death  of,    ....  247 

Hahne  &  Co.,  Newark,  N.  J.,  part- 
nership insurance  of,  in  The 
Prudential, 262 

Harnill,  Dr.  Edward  H.,  on  de- 
clined risks, 200 

Harben,  Henry,  testimony  before 
the  Royal  Commission,  30; 
on  agitation  for  Industrial  in- 
surance in  America,  30 ;  on  the 
history  of  the  British  Pruden- 
tial, 30 ;  reply  to  Elizur  Wright, 
46 ;  defends  the  British  Pru- 
dential, 47  ;  on  sickness  insur- 
ance, 95  ;  on  mortality  expe- 
rience of  British  Prudential, 
129. 

Harvey,  Augustus  F.,  on  Indus- 
trial insurance,  158 

Hauck,  Jacob,  on  Industrial  insur- 
ance,    279,  280 

Hawes,  Dr.  Edwin,  on  Industrial 
insurance, 216 

Health  insurance,  in  1845,  9  ;  fail- 
ure of,  9 ;  fallacies  of,  17 ;  at- 
tempt to  organize,  by  Pruden- 
tial Friendly  Society,  61,  62,  63 
(see  also  Sickness  insurance). 

Henry  VIII.,  destruction  of  Gilds 
by, 5 

Hildise  Bund,  of  the  Metropolitan 
Life  Insurance  Company,  28 ; 
a  failure,  106  ;  cumbrous  meth- 
od of,  146. 

Hilfinnoth,  Bund  plan  of  insur- 
ance, ..." 29 

Hobart,  Garret  A.,  on  Industrial 
insurance, 96 

Hodgkins,  Dr.,  on  benefit  socie- 
ties,   131 

Hoffman,  F.  L.,  on  negro  mor- 
tality,   139 

Hoi  way,  D.  N.,  on  the  science  of 
life  insurance,  27  ;  on  Indus- 
trial insurance,  190. 


326 


INDEX. 


PAGE. 

Home  office  of  The  Prudential, 
100,  147,  176;  occupation  of 
new,  191,  192  ;  preparation  to 
enlarge,  281,  282. 

Honesty  of  agents,  evidence  of,    .  252 
Hunt's  Merchants'  Magazine,  on 
Industrial  insurance,  9  ;  on  life 
insurance  vs.  savings  banks,  n. 


Illinois,  Insurance  Superintend- 
ent of,  on  Industrial  insurance, 
274 ;  murder  of  insured  chil- 
dren unknown  in,  274. 

Imitations,  fraudulent,  of  Indus- 
trial companies, 23 

Immediate  benefit,  problem  of, 
124  ;  change  in,  by  Prudential, 
154 ;  provisions  of  The  Pru- 
dential, 202  ;  under  Industrial 
policies,  215. 

Improvement  in  the  Prudential 
policy,  1876-1900, 312 

Income,  premium,  of  The  Pru- 
dential 1876-1899,  291  ;  total, 
of  The  Prudential,  1876-1899, 
292. 

Incontestability,  after  six  months, 
attempt  to  obtain,  in  Illinois, 
184 ;  of  Industrial  policies, 
after  two  years,  214. 

Independent,  New  York,  on  The 
Prudential, 213 

Indicator,  on  negro  life  insurance, 
209  ;  on  The  Prudential,  231. 

Industrial,  explanation  of  the 
term, 3,  160,  161 

Industrial  and  Commercial,  Ham- 
ilton, Ont., 59,  60 

Industrial  and  General,  The,  first 
English  Industrial  company,  3; 
founded,  1849,  5  J  description 
of,  9. 

Industrial  companies,  fraudulent 
imitations  of,  23  ;  early  effort 
to  organize,  22 ;  reasons  for 


PAGE. 

the  success  of,  49 ;  Govern- 
ment aid  in  organization  of, 
51  ;  organization  of,  a  public 
duty,  54. 

Industrial  depression,  effect  of, 
on  Industrial  insurance,  .  .  .  155 

Industrial  insurance,  compared 
with  Ordinary  insurance,  3, 
485  ;  defined,  3 ;  objects  of, 
4,  287  ;  educational  aspect  of, 
13.  14.  45.  I05,  148,  178,  190. 
191,  193,  194;  demand  for, 
35,  37,  42,  50,  5i.  53.  84,  85, 
92,  96,  98,  no,  in,  178,  253, 
286  ;  and  public  policy,  45,  113; 
principles  of,  partly  recog- 
nized, 8 ;  first  reference  to,  in 
America,  9  ;  early  opposition 
to,  15 ;  public  confidence  in,  15 ; 
early  recognition  of  the  value 
of,  23 ;  principles  of,  recognized 
by  1870,  24 ;  influenced  by 
English  emigration,  33;  growth 
of  sentiment  in  favor  of,  34 ; 
early  development  distinct 
from  Ordinary  companies,  39  ; 
in  the  United  States,  beginning 
°f ,  39  >  superior  to  savings 
banks,  43  ;  various  opinions  on, 
44 ;  considered  impracticable 
in  1874, 45  ;  attacked  by  Elizur 
Wright,  46;  method  of,  ex- 
plained, 48 ;  conditions  favor- 
ing, 56;  founders  of,in  America, 

58,  63  ;  attempted  in  Canada, 

59,  60 ;    and  funeral  extrava- 
gance, 66 ;  early  difficulties  of, 
68;   actuarial  basis  of,  61,  62, 
75,  76,  77;   simplicity  of,  76; 
equity  of  system,  76  ;  English 
origin  of,  78 ;  in  force  in  the 
United  States,  1879,  116;  offi- 
cially recognized  in  Massachu- 
setts, 119, 1 20  ;  is  not  a  charity, 
34,  144,  203  ;  in  Massachusetts, 
significant    approval  of,   222 ; 
"  the  wonder  of  the  age,"  247 ; 


INDEX. 


327 


PAGE 

not  a  manufacture,  but  a 
growth,  286  ;  in  force  in  The 
Prudential,  1876-1899,  288  ;  the 
highest    development  of   life 
insurance,    318     (see    also 
Moral    aspect,   Social    aspect, 
Approval,  and  Value). 
Industrial     insurance     company, 
first,  in  England,  3  ;  first  effort 
to  organize,  in  America,  21. 
Industrial  Life  Insurance  Co.  of 
New  York,  the,  attempt  at  or- 
ganization,     ...  ....     22 

Industrial  Insurance   Co.    of  the 

United  States, 114 

Industrial  Insurance  Co.  of  Amer- 
ica, a  fraud, 173 

Industrial     insurance     societies, 

fraudulent, 89,  93,  173 

Industrial-Ordinary  insurance,  127, 

165,  191,  194,  230,  231. 
Industrial-Ordinary  lapse  release,  259 
Industrial-Ordinary  policy,  differ- 
ent from  Ordinary, 290 

Industrial  policies,  increasing  in 
amount,  289  ;  average  amount 
of  Prudential,  289. 

Industrialism,  Lecky  on,     .    .    .    .  315 
Infantile  applications,  not  indica- 
tive of  adverse  selection,  .    .    .    81 
Infantile    rate    table,    Prudential 
Friendly    Society,    72 ;     1879, 
108,  121  ;   1896,  225. 

Influenza,  epidemic  of, 183 

Instructions,  Agents'  Manual  of,  .  240 
Insurable  interest  defined,  49,  161, 

179,  198,  199. 

Insurance  and  Commercial  Maga- 
zine on  Industrial  insurance,  .  147 
Insurance  Commissioners,  special 
committee    of,    on    Industrial 

insurance, 122 

Insurance  Critic,  on  real  estate 
purchase,  of  The  Prudential, 
176,  177;  on  The  Prudential, 
233.  234- 


PAGE. 

Insurance  enterprises,  fraudulent, 

in  1868, 18 

Insurance  Herald,  on  statement 

of  Mr.  J.  F.  Dryden,  .....  222 
Insurance  in  force  in  The  Pruden- 
tial, December  31,  1876,  93 ; 
1877,  99  I  1878,  108  ;  1879,  116  ; 
1880,  132;  1881,  142;  1882,  146, 
147;  1883,  151;  1884,  153,  154, 
155;  1885,  159;  1886,  166;  1887, 
169 ;  1888,  175  ;  1889,  181 ;  1890, 
184;  1891,  185,  186;  1892,  191 ; 
1894,  202,  203,  212;  1895,  224; 
1897,  247  ;  1898,  264 ;  1899,  283. 
Insurance  Journal,  New  York,  on 

The  Prudential,  ....  196,  197 
Insurance  Times,  on  Health  in- 
surance fallacies,  17  ;  on  Indus- 
trial insurance,  31,  32,  34,  39, 
112,  131;  in  1874,  45;  in  1875, 
67;  in  1879,  IIJ;  on  Elizur 
Wright,  44;  on  Insurance 
Commissioner  Clarke's  report, 
52 ;  reasons  for  favoring  In- 
dustrial insurance,  53,  54  ;  on 
funeral  extravagance,  66 ;  on 
taxation  of  life  insurance, 
256. 

Insurance    World,   on    Industrial 
insurance,  60,  102  ;  recognizes 
necessity  of  Industrial  insur- 
ance, no;  on  The  Prudential, 
118  ;  on  surrender  value  of  In- 
dustrial policies,  170,  171. 
intemperance  clause  in  the  Pru- 
dential policy,  eliminated,    .    .  155 
Intermediate  insurance,   105 ;    of 

The  Prudential,  245. 
nternational  Life  of  London,  re- 
insurance of,  29 

nvestment  features  of  Industrial 

insurance, 290 

nvestments,  analysis  of  Pruden- 
tial, .    .    .    , 299 

ssue    of   new  business    by  The 
Prudential,  1876-1899,    ....  293 


328 


INDEX. 


PAGE. 


Issue,  weekly  Industrial,  of  The 
Prudential,  300  ;  weekly  Ordi- 
nary, of  The  Prudential,  300. 

Ithaca  Daily  News,  Industrial  in- 
surance of  employees,  .  .  268,  269 


Jersey  City  Journal  on  Industrial 
insurance, 97 

John  Hancock  Mutual  Life,  Pru- 
dential branch  of,  101  ;  com- 
mences Industrial  insurance, 

US- 

Johnson,  A.  B.,  attack  on  life  in- 
surance,   10 

Jones,  Hugh  R.,  on  insurance  of 
children, 223 


Keyes,  E.  W.,  savings  bank  plan 
of  insurance, 36 


Laboring  Men's  Life  Insurance 
Co.,  Chicago,  111., 20 

Labor  problems  vs.  Industrial  In- 
surance,   284 

Labor-Term  insurance, 36 

Lapsed  policy-holders,  treatment 
of, 296 

Lapses,  circular  on,  123  ;  efforts 
made  to  prevent,  123,  180,  195, 
196,  225,  244,  251,  252,  265,  280  ; 
official  opinion  on  the  question 
°f»  *35  >  a  l°ss  to  the  company, 
139,  141,  294;  in  Industrial  in- 
surance, 139,  171,  179,  197,  198, 
296  ;  Weekly  Underwriter  on 
question  of,  141  ;  misconcep- 
tion as  to  importance  of,  142, 
212  ;  consideration  of  question 
of,  212  ;  reduction  of,  238  ;  a 
serious  problem,  252. 

Lawson,  W.  F.,  Superintendent, 
anniversary  of, 283 

Lecky,  W.  E.  H.,  on  public 
opinion,  222 ;  on  conduct  and 


PAGE. 

progress,  287 ;  on  Industrial- 
ism, 315. 

Legislation,  evils  of,  in  dealing 
with  life  insurance,  41;  neces- 
sity of  restrictive,  135 ;  Her- 
bert Spencer  on  ill-advised, 
317  ;  adverse,  attempts  at  (see 
Children,  Negroes,  Surrender 
value). 

Liabilities,  of  The  Prudential, 
1877-1899,  298  ;  analysis  of  The 
Prudential,  299. 

Liberality,  and  equity  of  The 
Prudential,  195,  239. 

License  fees  of  Industrial  agents,   136 

Lien  provision  of  Industrial  poli- 
cies  243 

Liens,  form  of  Industrial  policy,  243 

Life  insurance,  mass  vs.  class,  3  ; 
for  the  masses,  8,  n,  12,  17,  21, 
23»  76,  77  ;  vs.  savings  banks, 
10,  11,25,42,43,285;  ignorance 
of  the  principles  of,  n  ;  for 
small  amounts,  12,  16  ;  for  the 
poor,  13,  23,  41,  64,  102,  in, 
112  ;  as  a  duty,  13  ;  and  educa- 
tion (see  Educational  value)  ; 
in  1860,  13  ;  lack  of  confidence 
in  the  principles  of,  15  ;  ten- 
dency of,  in  1864,  16  ;  in  1868, 
20  ;  moral  obligation  of,  21  ; 
scientific  principles  of,  27  ; 
Bund  or  Union  plan  of,  28,  29, 
89,  102  ;  new  departure  in,  30  ; 
not  philanthropy,  34,  41,  144, 
203  ;  definition  of,  34 ;  secur- 
ity, the  first  element  in,  34,  50 ; 
savings  bank  plan  of,  36  ;  for 
the  poor,  defined,  41  ;  nature 
of,  41  ;  attacked  by  Elizur 
Wright,  43  ;  for  those  who 
need  it  most,  67. 

Life  Insurance  Association  of 
America,  Bund  plan  of,  ...  29 

Life  Insurance  Co.  of  Virginia,   .  168 

Limit  of  insurance,  Prudential 
Friendly  Society, 70 


INDEX. 


329 


PAGE. 


Loans  on  Industrial  policies,  243,  244 
Loyalty  of  the  Prudential  force,  282 


M 


McDermott,  Thos.  L-,  on  Indus- 
trial insurance,  ....  216,  217 

Mackay,  T.,  on  tendency  of 
wage-earners  towards  econom- 
ic independence,  190,  191 ;  on 
Industrial  insurance,  221. 

Maine,  explosion  of  the  U.  S.  S., 
253  ;  Prudential  policy-holders 
lost  in  the  explosion  of  the,  254. 

Malone,  Rev.  T.  H.,  on  Industrial 
insurance, 277 

Management  of  The  Prudential, 
efficiency  of  the, 155 

Management  of  agents,   .    .     270,  271 

Manchester  Order  of  Unity,  ...    60 

Manhattan  Co-operative  Relief 
Association, 18,  19 

Masses,  life  insurance  for  the,  8, 
n,  12,  17,  21,  23,  76,  77. 

Mass  insurance,  vs.  class  insur- 
ance, 3 ;  by  The  Prudential,  179. 

Massachusetts,  attempt  to  prohibit 
insurance  of  children  in,  217  ; 
failure  of  attempt  to  prohibit 
insurance  of  children  in,  221  ; 
efforts  at  adverse  legislation  in, 
229,  230 ;  Deputy  Insurance 
Commissioner  of,  on  Indus- 
trial insurance,  275. 

Massachusetts  Insurance  Commis- 
sioner, on  negro  discrimina- 
tion, 153  ;  on  Industrial  insur- 
ance, 48,  160,  161,  180. 

Massachusetts  Insurance  Report, 
of  1874,  on  Industrial  insur- 
ance, 48,  in  ;  on  Industrial  in- 
insurance  in  1880,  119. 

Massachusetts  Labor  Commission 
on  savings  bank  depositors,  .  .  25 

Massachusetts  Labor  Report,  on 
life  insurance,  1875,  65 ;  on 
charity,  in. 


PAGE. 

Massachusetts  S.  P.  C.  C.,  opposi- 
tion to  insurance  of  children, 
217 ;  change  of  views  on  the 
insurance  of  children,  217. 

Maternal  instinct,  among  working 
women,  128  ;  among  the  poor, 
279,  280. 

Medical  Director,  instructions  is- 
sued by  The  Prudential,  .  .  .  240 

Medical  examinations,  in  Indus- 
trial insurance,  201,  202 ;  on 
revivals,  244 ;  ratio  of,  to  rejec- 
tions, 309. 

Medical  inspection, 239,  240 

Medical  statistics  of  The  Pruden- 
tial,    309,  312 

Methods  of  transacting  Industrial 
business, 240,  241 

Metropolitan  Life  Insurance  Co., 
Bund  plan  of,  28,  102  ;  com- 
mences Industrial  insurance, 
116;  progress  of,  132;  exami- 
nation of,  205. 

Metuchen  Inquirer  on  The  Pru- 
dential, 134  ;  on  Prudential 
progress,  177. 

Military  service,  no  extra  charge 
for, 255 

Mill,  J.  S.,  on  taxation  of  life  in- 
surance,   256 

Miners'  and  Mechanics'  Life  In- 
surance Co., 20 

Minors,  life  insurance  of  (see  Chil- 
dren). 

Minority,  Colorado  House  Bill  No. 
317  defeated  by  a  small,  .  .  .  281 

Misrepresentation  of  Industrial  in- 
surance,   200 

Missouri  Valley  Life,  insurance 
scheme  of,  36  ;  insurance  plan 
of,  and  failure,  37. 

Monitor,  Insurance,  on  life  insur- 
ance for  the  poor,  13  ;  on  Gov- 
ernment insurance,  16 ;  on 
tendency  of  life  insurance  in 
1864,  16  ;  on  life-insurance 
fallacies,  17  ;  on  insurance  for 


330 


INDEX. 


PAGE. 

the  masses,  17,  21 ;  on  The  Pru- 
dential Friendly  Society,  78 ; 
on  Industrial  insurance,  105 ;  on 
the  Bund  plan  in  life  insurance, 
106 ;  on  the  progress  of  The 
Prudential,  117  ;  on  Prudential 
liberality,  187,  188  ;  on  surren- 
der value  law  of  1895,  214 ;  on 
Industrial  rates,  226 ;  on  the 
success  of  The  Prudential,  266. 

Monthly  premium  payment  plan, 
of  Mutual  Benefit  of  Newark, 
21 ;  advocated,  32  ;  inadequacy 
of,  32  ;  endorsed  by  the  Insur- 
ance Times,  40;  of  the  John 
Hancock  Mutual,  101. 

Moon,  J.,  on  Industrial  insurance,  223 

Moral  aspect  of  Industrial  insur- 
ance,   21,  68,  91,  113,  234 

Morgan,  Nathan  D.,  on  Industrial 
insurance  in  1874, 44,  45 

Mortality  of  children,  32  ;  exces- 
sive, as  explaining  the  demand 
for  Industrial  insurance,  32  ;  of 
New  York  City,  excessive  dur- 
ing 1870-1872,  32  ;  excessive 
in  American  cities  previous  to 
J875,  55  ;  statistics  of  negro 
population,  138;  comparative, 
of  children  and  adults,  220  ;  by 
age  and  sex,  in  Prudential  ex- 
perience, 311. 

Mortality  experience,  investiga- 
tion into  Prudential,  159  ;  of 
children  insured  in  The  Pru- 
dential compared  with  Farr's 
Table,  218;  The  Prudential, 
1891-1898,  310,  311. 

Motto  of  The  Prudential,     ....  225 

Mowatt,  James  A.,  on  Industrial 
insurance, 46 

Murder  of  children  for  insurance 
money,  not  proven,  128,  129  ; 
unknown,  150,  152,  207,  208, 
217,  274, 276  ;  denied,  150, 223. 

Mutual  Benefit  Life  Insurance  Co., 
Newark,  N.  J.,  effort  to  estab- 


PAGE. 

lish     weekly    premium     pay- 
ments in  1847, 8 

N 

National  character  of  Industrial 
insurance, 303,  307 

Nationality  of  Industrial  policy- 
holders  in  The  Prudential,  .  302 

Necessity,  Industrial  insurance  a,  134 

Neglect  of  insured  children  prac- 
tically unknown,  .  .  207,  217,  223 

Negroes,  insurance  of,  137,  185, 
208,  209,  21 1  ;  first  Pruden- 
tial adult  rate  table  for,  138; 
discrimination  against,  pro- 
hibited in  Massachusetts,  153  ; 
in  Rhode  Island,  159 ;  in  New 
York,  185  ;  discrimination 
against,  207 ;  excessive  mor- 
tality of,  137,  209,  302  ;  mortal- 
ity of,  in  Prudential  experi- 
ence, 210  ;  not  solicited  by  The 
Prudential,  211;  Leslie  D. 
Ward  on  insurance  of,  209-211. 

NeisonandJ.  F.  Dryden,     ....    60 

Newark  Daily  Advertiser  on  The 
Prudential, 74,  75,  90,  91 

Newark  Daily  Journal  on  The 
Prudential, 147 

Newark  Evening  Courier  on  The 
Prudential  Friendly  Society, 
58,  75,  76. 

Newark  Morning  Register  on  The 
Prudential  Friendly  Society, 
58  ;  on  Industrial  insurance,  76, 
77 ;  on  The  Prudential,  144,  267. 

Newark,  N.  J.,  birthplace  of  In- 
dustrial insurance,  56 ;  pauper- 
ism in,  previous  to  1875,  5^  > 
a  favorable  field  to  organize  an 
Industrial  company,  78  ;  mor- 
tality of  children  in,  130 ;  be- 
neficent results  of  Industrial 
insurance  in,  307  ;  decrease  in 
pauper  burials  in,  307  ;  large 
proportion  of  industrial  popu- 
lation insured,  307. 


INDEX. 


331 


PAGE. 

Newark  Sunday  Call,  on  The  Pru- 
dential Friendly  Society,  85, 
86 ;  on  The  Prudential,  133, 134. 

New  Era  in  Industrial  insurance, 
187,  235. 

New  Hampshire  Insurance  Com- 
missioner on  Industrial  insur- 
ance,   263 

New  insurance,  explanation  of, 
212  ;  issued  by  The  Prudential, 
1876-1899, 293 

New  Jersey,  attempts  at  adverse 
legislation  in,  184  ;  law  prohib- 
iting discrimination  against 
negroes,  208,  209;  surrender 
value  question  in,  211,  212 ; 
surrender  value  law  of,  214 ; 
Insurance  Commissioner  of,  on 
Industrial  insurance,  273,  274. 

New  Jersey  Mutual,  failure  of  the,     98 

Newspaper  attacks  on  Industrial 
insurance,  .  .  .  150,  199,  200,  277 

New  York  City,  excessive  mor- 
tality in,  32';  pauper  burials  in, 
32,  56 ;  infant  mortality  in,  312. 

New  York  Insurance  Department 
on  Industrial  insurance,  205,  274 

New  York  Insurance  Report,  on 
industrial  depression,  155  ;  on 
Industrial  insurance,  134,  135, 

151,  155- 

New  York  Life  Insurance  Co., 
Union  plan  of,  27,  28,  29  ;  offi- 
cers of  the,  attempt  Industrial 
insurance,  114. 

New  York  Life  Insurance  and 
Trust  Co. ,  insurance  for  small 
sums  by  the, 12 

New  York  State,  Prudential  en- 
ters, 117 ;  insurance  license 
question  in,  136 ;  attempt  to 
prohibit  the  insurance  of  per- 
sons under  ten  years  in,  182  ; 
Insurance  Superintendent  of, 
on  Industrial  insurance,  274  ; 
murder  of  insured  children 
unknown  in,  274. 


PAGE. 

New  York  Workingmen's  Bene- 
fit Co.,  20 

Non-forfeiture,  law  not  applicable 
to  Industrial  insurance,  122 ; 
in  Industrial  insurance,  164, 
165  (see  Surrender  value, 
Lapses,  Paid-up  insurance). 

Notification  law  not  applicable  to 

Industrial  insurance, 122 

O 

Objects  of  Industrial  insurance,  4, 
287,  316. 

Occupation,  of  first  male  appli- 
cants to  The  Prudential  Friend- 
ly Society,  80  ;  restrictions  re- 
moved, 155  ;  restrictions  on, 
245,  246  ;  of  Prudential  Indus- 
trial policy-holders  (male),  304, 
305 ;  of  Prudential  Industrial 
policy-holders  (female),  306; 
dangerous,  of  Industrial  pol- 
icy-holders, 310. 

Odd  Fellows  in  America,     ....      8 

Office  force  of  The  Prudential, 
1885-1900, 300 

Ohio,  Insurance  Superintendent 
of,  on  Industrial  insurance,  171,  274 

Ohio,  murder  of  insured  children 
unknown  in,  274  ;  attempts  to 
prohibit  the  insurance  of  chil- 
dren under  12  years  defeated 
in,  281. 

Old  Guard,  Prudential,  explana- 
tion of,  177 ;  privileges  of, 
241 ;  membership  in,  .282. 

Opposition  to  Industrial  insur- 
ance, early,  15  ;  reasons  for,  141 ; 
character  of,  150 ;  a  class  sen- 
timent, 278  (see  Approval). 

Orange  Journal,  N.  J.,  on  value  of 
Industrial  insurance,  ....  308 

Ordinary-Industrial  insurance,  127, 
165,  191,  194,  230,  231. 

Ordinary  insurance,  vs.  Industrial 
insurance,  3,  285  ;  attacks  on, 
10,  26 ;  by  Industrial  com- 
panies, 165  ;  commenced  by 


332 


INDEX. 


The  Prudential,  165  ;  in  force 
in  The  Prudential,  1886-1899, 
288  ;  proportion  of  total  busi- 
ness, 290. 
Ordinary  policies,  average  amount 

of  Prudential, 289 

Origin  of  Industrial  insurance,  78,  318 
"Our  American  Union"  on  life 
insurance, 10 


Paid-up  Industrial  insurance,  211, 
212,  214,  237;  misstatement 
about,  by  University  Settle- 
ment Society,  213  ;  explained, 
187,  188  ;  granted  by  The  Pru- 
dential, 265  ;  1890-1899,  295. 

Panic  and  depression,  of  iS73~'78, 
effect  on  Industrial  insurance, 
68  ;  of  1893,  effect  of,  195 ; 
effect  of,  on  life  insurance, 
203. 

Partnership  insurance  by  The  Pru- 
dential,   262 

Paterson  Guardian  on  Industrial 
insurance, 97 

Paterson  Press  on  The  Pruden- 
tial,    ...  142,  143 

Pauper  burials,  the  abhorrence  of, 
4  ;  in  New  York  City,  32  ;  and 
Industrial  insurance,  147,  148 ; 
decrease  in,  307,  308  ;  table  of, 
for  ten  American  cities,  iSSo- 
1899,  308. 

Pauperism ,  in  Massachusetts,  1875 , 
65;  insurance  against,  114;  and 
Industrial  insurance,  147,  148  ; 
prevented  by  Industrial  insur- 
ance, 280;  in  American  cities 
previous  to  1875,  56. 

Paupers,  life  insurance  of,  un- 
profitable and  impracticable,  .112 

Peabody  Life,  savings  bank  plan 
of  insurance,  36  ;  weekly  pre- 
mium payment  plan  of,  36. 

Peacock,  Mr.,  effort  of,  to  organ- 
ize an  Industrial  company,  .  21,  22 


PAGE. 

Pennsylvania,  attempt  to  prohibit 
insurance  of  children  in,  172  ; 
Insurance  Commissioner  of, 
on  Industrial  insurance,  275  ; 
murder  of  insured  children 
unknown  in,  275. 

Pennsylvania  Co.  for  Insurance  of 
Lives, 8 

Pensions,  industrial,  old  age,  im- 
practicable,   73 

People's  Life  Insurance  Co.  of 
New  York  City,  ......  20 

People's  Insurance  Co.  of  Nor- 
wich, Conn., 168 

Peto,  Sir  S.  Morton,  on  taxation 
of  life  insurance, 256 

Philadelphia  Charity  Organization 
Society  on  Industrial  insur- 
ance,   172 

Philadelphia  Intelligencer  on 
paid-up  Industrial  policies,  188,  189 

Philanthropy,  insurance  is  not, 
34,  144,  203. 

Piedmont  and  Arlington  Life  In- 
surance Co.,  connection  with 
the  Widows'  and  Orphans' 
Friendly  Society, 38 

Pittsburg  Dispatch  on  Industrial 
insurance, 149 

Platt,  Sarah  S.,  on  Industrial  in- 
surance, ........  276,  277 

Police,  chief  of,  on  Industrial  in- 
surance in  Louisville,  .  .  .  217 

Policemen's  Insurance  Fund,  in 
New  York  City 17 

Policy,  return  of,  if  not  satisfac- 
tory, 228 ;  new,  of  The  Pruden- 
tial, 236,  237  ;  average  amount 
of  Industrial  and  Ordinary, 
289- 

Political  economy  and  Industrial 
insurance,  2  (see  also  Eco- 
nomic aspects). 

Poor,  life  insurance  for  the,  13,  23, 
41,  64,  102,  in,  112. 

"Poor  man's  friend,"  The  Pru- 
dential the, 144 


INDEX. 


333 


PAGB. 

Population,  sex  distribution  of, 
insured  in  The  Prudential,  .  .  306 

Post-office  insurance 16 

Poverty  and  pauperism,  difference 
between, 73,  112 

Premium  payment  plans,  8,  21, 
27,  32,  36.  40. 

Premium  payments,  methods  of, 
Prudential  Friendly  Society,  .  70 

Premium  Rates  of  Industrial  Com- 
panies, discussion  of, 50 

Premiums,  weekly,  first  applied  in 
life  insurance,  8;  paid  out  of 
luxuries,  not  necessities,  73; 
weekly  payment  of,  preferred, 
82  ;  unpaid  portion  of  annual, 
deducted  from  claim,  124 ;  re- 
turn of  first  two  weeks',  if  pol- 
icy is  not  satisfactory,  228 ; 
limit  of,  in  insurance  of  chil- 
dren, 226,  227  ;  income  of  The 
Prudential,  1876-1899,  291. 

Principles,  life  insurance,  igno- 
rance of,  ii  ;  life  insurance, 
lack  of  confidence  in,  15  ;  Pru- 
dential foundation,  176 ;  busi- 
ness, of  The  Prudential,  253. 

Printing  and  Supply  Departments 
of  The  Prudential, 301 

Privileges  of  the  Prudential  Old 
Guard, 241 

Problem,  The  Prudential  solves 
the  insurance,  ....  144,  146 

Profit-sharing  policies,  Industrial,  242 

Progress  Life  and  Savings  Insur- 
ance Co.  of  the  United  States,  24 

Progress  of  The  Prudential  Insur- 
ance Co.  (see  Insurance  in 
force). 

Propinquity  of  Industrial  insur- 
ance,   102 

Provident  Savings  Assurance  So- 
ciety, attempt  to  transact  busi- 
ness without  agents,  65  ;  com- 
menced Industrial  insurance, 
114;  discontinued  Industrial 
insurance,  142. 


PAGB. 

Pseudo  life-insurance  companies,    173 

Prudential  Benefit  Society,  The, 
Newark,  N.  J., 93 

Prudential  League,  Harrisburg, 
Pa., 89 

Prudential,  the,  of  Bngland,  model 
for  the  American  company,  i ; 
and  the  Industrial  and  General, 
5  ;  and  the  International  Life, 
29  ;  influence  of,  on  American 
insurance  development,  16 ; 
in  1864,  16 ;  in  1868,  21; 
method  of  business,  23  ;  his- 
tory of,  30;  in  1872,  31;  In- 
surance Times  on,  41  ;  attacked 
by  Gladstone,  46 ;  in  1874,  60 
(see  Harben,  Henry). 

Prudential  Friendly  Society,  The, 
organized,  1875,  38 ;  in  1875, 
57 ;  first  application  to,  58 ; 
"founded  on  a  rock,"  58; 
founders  of,  58,  63  ;  organiza- 
tion difficult,  63 ;  first  Board 
of  Directors,  69,  85  ;  first  pros- 
pectus of,  70  ;  medical  exam- 
ination not  required,  70  ;  rates 
charged  by,  72,  73  ;  foundation 
principles  of,  74,  75,  85  ;  ob- 
jects and  methods,  71,  74,  75  ; 
benefits  of  plan,  76 ;  progress 
of,  iu  1875,  79;  class  of  per- 
sons insured  in,  80 ;  progress 
of,  1876,  84,  92,  93 ;  approval 
of  plan  of,  85,  no  ;  early  finan- 
cial difficulties,  93;  title 
changed  to  The  Prudential  In- 
surance Co.  of  America,  95. 

Prudential  Insurance  Co.  of 
America,  The,  Newark,  N.  J., 
first  American  Industrial  in- 
surance company,  i  ;  foun- 
dation principles  of,  63,  64; 
"founded  on  a  rock,"  77; 
an  institution  for  all,  77  ;  ex- 
tends its  operations,  95 ;  capi- 
tal increased,  117  ;  name  of,  a 
household  word,  119;  Insur- 


334 


INDEX. 


PAGE. 

ance  Times  on,  131  ;  praise  of, 
133,  134 ;  newspaper  attack  on, 
145  ;  tenth  anniversary  of, 
156;  public  discussion  of 
method  of,  166,  167  ;  growth 
of,  176 ;  Boston  Herald  on, 
180  ;  paid-up  policies  of,  187  ; 
grants  surrender  values,  188, 
189  ;  insurance  in  force,  1876- 
1899,  288 ;  total  income  of, 
1876-1899,  292  ;  new  business 
issue,  1876-1899,  293  ;  paid-up 
policy  issue,  1890-1899,  295  ; 
payments  to  policy-holders, 
1876-1899,  297 ;  surplus  of, 
1876-1899,  298  ;  assets  of,  1876- 
1899,  298  ;  liabilities  of,  1877- 
1899,  298. 

Prudential  Insurance  Co.  of  Amer- 
ica, New  York  City,  .  .  .52 

Prudential  Life  Insurance  Co., 
Columbus,  Ohio, 34 

Prudential  Mutual  Aid,  Harris- 
burg,  Pa., 90 

Prudential  Weekly  Record,  The, 
on  the  Rock  of  Gibraltar,  267  ; 
published  for  the  field  force, 
301. 

Public  charity  and  Industrial  in- 
surance,   113 

Public  policy  and  Industrial  in- 
surance,   45,  113 


RatcliffeandJ.  F.  Dryden,  ...  60 
Rates,  premium,  relation  of  mor- 
tality to,  109 ;  change  in  Pru- 
dential, October  6,  1884,  154 ; 
January  4,  1886,  164 ;  in  1890, 
184  ;  in  1896,  225. 
Rate  tables,  first  adult,  Prudential 
Friendly  Society,  71 ;  first  in- 
fantile, Prudential  Friendly  So- 
ciety, 72 ;  Prudential  infantile, 
1879,  108 ;  Prudential  adult, 
1879,  109 ;  first  infantile,  Pru- 
dential Insurance  Co.,  121  ; 


PAGE, 

Five -Hundred  Dollar,  adult, 
126 ;  Prudential,  for  colored 
risks,  138;  Child's  Endowment, 
193  ;  Prudential  infantile,  1896, 
225 ;  Prudential  adult,  1896, 
228 ;  Prudential  intermediate, 
246. 

Real  estate,  purchase  of,  for  Pru- 
dential office  building,  .  .  175,  176 

Receipt  books,  cost  of,  assumed 
by  The  Prudential, 260 

Reese,  Dr.  R.  M.,  on  insurance 
education, 13 

Regulation,  statutory,  of  Indus- 
trial insurance, 183 

Regulating  statute,  efforts  in 
Colorado  to  pass  a, 272 

Rejected  lives,  observation  on,       200 

Rejections,  medical,  in  Pruden- 
tial Industrial  and  Ordinary 
Departments, 309 

Relief  and  Aid  Society,  Chicago,  290 

Religious  press  on  Manhattan  Co- 
operative Relief  Association,  .  19 

Reserve,  required  on  Industrial 
policies,  119  ;  on  infantile 
policies,  120;  on  Industrial 
policies,  discussion  on,  151. 

Retail  principle  in  life  insurance,  105 

Revival  privileges  of  Industrial 
policy-holders,  89,  124,  195, 
196,  242,  243. 

Reynolds,  Dr.  F.  S.,  on  Industrial 
insurance,  .  .  217 

Rhodes's  United  States  Advertiser 
on  mass  insurance, n 

Ribot,  T.,  on  scientific  evidence,  315 

Risks,  Industrial,  character  of, 
82,  83,  302-307. 

Rochdale,  Industrial  insurance  in,     42 

Roman  Collegia,  the,  as  insurance 
associations, 5 

Royal  Liver  Friendly  Society, 
Liverpool,  Bug.,  60  ;  mortality 
experience  of  the,  129. 


INDEX. 


335 


PAGE. 
S 

St.  Peter's  Workingmen's  Benefit 
Club in 

Savings,  semi-compulsory,  by 
Industrial  insurance,  43;  sys- 
tematic, increased  by  Indus- 
trial insurance,  309. 

Savings  banks  vs.  life  insurance, 
10,  n,  25,  42,  43,  59,  285. 

Savings  Bank  Commission  of 
Massachusetts,  report  of  1852,  25 

Savings  banks  depositors  of  Mas- 
sachusetts, wealthy,  25,  26; 
Governor's  message  on,  25. 

Saving  habits,  undeveloped,  25  ; 
of  the  masses  in  1872,  25  ;  de- 
veloped by  Industrial  insur- 
ance, 26,  43,  309. 

Savings  institution,life  insurance  a,  284 

Security  the  essential  principle  in 
life  insurance,  .  .  .34,  50,  77,  299 

Selection,  adverse,  in  Industrial 
insurance, 202 

Self-solicited  insurance  for  the 
masses,  fallacy  of, 64,  65 

Sentiment  as  a  factor  in  legislation,  153 

Sex  distribution,  of  persons  in- 
sured in  The  Prudential,  306  ; 
of  decedents,  in  the  Pruden- 
tial's experience,  311. 

Shannon,  M.,  on  Industrial  insur- 
ance,   205 

Sickness,  excessive,  previous  to 
1875,  55  ;  inadequacy  of  statis- 
tics of,  6 1  ;  statistics  of,  77. 

Sickness   insurance,    attempt   at, 

61,  62,  63  ;  discontinued  by  The 
Prudential    Friendly    Society, 

62,  95  ;   in  small  demand,  83, 
loo  ;  branch  of  Industrial  com- 
panies, 94 ;  why  a  failure,  94, 
95 ;    a    failure,    108    (see  also 
Health  insurance). 

Small  amounts,  life  insurance  for, 
12,  104,  105. 


PAGE. 

Smith,  Heber,  on  Industrial  insur- 
ance in  1874,  44 

Social  aspects  of  Industrial  insur- 
ance, 104,  113,  169,  178,  190, 
191,  193,  194,  234,  284,  286,  315, 
316. 

Solvency,  of  Industrial  insurance 
companies,  132  ;  of  The  Pru- 
dential, 299. 

Special  Adult  policy  of  The  Pru- 
dential,   164 

Spectator,  the,  on  health-insur- 
ance fallacies,  17  ;  criticism  of 
Manhattan  Co-operative  Relief 
Association,  19  ;  on  the  British 
Prudential,  30,  31  ;  on  Indus- 
trial insurance,  30,  103,  104, 
169;  interview  with  life  under- 
writers, 44,  45  ;  on  attack  on 
The  Prudential,  145  ;  on  The 
Prudential,  145,  146,  156;  on 
the  insurance  of  children,  182  ; 
on  anti-discrimination  laws, 
185 ;  on  Industrial  insurance 
progress,  203,  204 ;  on  Indus- 
trial rates,  226 ;  on  Industrial - 
Ordinary  insurance,  231. 

Spencer,  Herbert,  on  Industrial 
insurance,  2  ;  on  co-operation, 
1 8 ;  on  credulity  and  belief, 
316 ;  on  evolutionary  tenden- 
cies, 137  ;  on  ill-advised  legis- 
lation, 317. 

Sprague,  T.  B.,  on  life  insurance 
of  children,  129,  159. 

Sprague,  Actuary,  Connecticut 
Insurance  Department,  on  val- 
uation of  Industrial  policies,  160 

State  life  insurance  a  failure,     .    .    16 

State  supervision  of  Industrial 
companies, 135,  180 

Statistical  data  demanded  by  Mas- 
sachusetts agitators, 230 

Status,  transition  from,  to  con- 
tract, 6  ;  vs.  contract,  75. 

Stock,  sale  of  Prudential,  .    .  145,  146 


INDEX. 


PAGE. 

Stokes,  Thos.  T.,  on  Industrial 
insurance, 278 

Straight  canvassing,  results  of, 
250  ;  increased  efforts  at,  269. 

Success,  of  Industrial  companies 
in  doubt,  103,  105 ;  of  The 
Prudential  by  1879, 118  ;  in  In- 
dustrial insurance,  difficulty  of, 
168  ;  of  Industrial  insurance, 
evidence  of,  173. 

Suicide  clause,  in  the  Prudential 
policy,  155  ;  removed,  229. 

Sumner,  Charles,  on  taxation  of 
life  insurance, 256 

Sumner,  Professor  W.  G. ,  on  social 
duties,  6  ;  on  charity,  41. 

Sun  Life  Insurance  Co.,  The,  or- 
ganized,   183 

Supply  and  Printing  Departments 
of  The  Prudential,  301 

Surplus  of  The  Prudential,  1876- 
1899, 298 

Surrender  value,  inexpedient  in 
Industrial  insurance,  87,88;  of 
Industrial  policies,  87  ;  in  In- 
dustrial insurance,  164,  165, 
170  ;  attempt  to  pass  laws,  170, 
211,  212;  question  discussed, 
170,  171,  188, 189,  214,  295, 296; 
after  two  years,  184 ;  law  of 
New  Jersey,  1895,  213,  214; 
privilege  of  Industrial  policy- 
holders,  235  ;  cash,  237  ;  mis- 
conception of  question  of,  296. 


Taxation  of  life  insurance,  113, 
256 ;  taxes  on  Industrial  and 
Ordinary  policies  assumed  by 
the  Company,  256  ;  taxes  paid 
by  The  Prudential,  267. 

Tax-payer,  Industrial  insurance 
and  the, 307,  308 

Temperance  and  Industrial  insur- 
ance,   241 


PAGE. 

Tennessee,  attempts  to  prohibit 
insurance  of  children  in,  .  .  .216 

"The  Prudential,"  bi-monthly 
publication, 301 

Thornton,  George  H., 117 

Thrift,  defined,  4 ;  Industrial  in- 
surance encourages,  91,  164, 
169,  170;  Industrial  agents 
'  teachers  of,  148 ;  Industrial 
insurance  a  modern  form  of, 
287. 

Tilt,  Dr.  E.  J.,  on  child  insurance,  192 

Times,  New  York,  on  Govern- 
ment insurance, 16 

Trenton  True  American  on  child 
murder  and  Industrial  insur- 
ance,   128 

Tribune,  New  York,  attack  on  life 
insurance,  26  ;  approval  of  In- 
dustrial insurance  in  1875,  64  ; 
on  insurance  of  children,  152  ; 
on  Prudential  progress,  169. 

Tubercular  diseases,  mortality 
from,  in  the  Prudential's  ex- 
perience,   310,  311 

Tuckett's  Insurance  Journal  on 
straight  canvassing, 12 

Twisting  of  Industrial  policies,  .    .  181 

U 

Undertakers  and  Burial  Insur- 
ance Co.,  Richmond,  Va.,  .  .  35 

Union  plan  of  the  New  York  Life 
Insurance  Co.,  .  .  ...  27 

Union  or  Bund  plan  a  failure,  27 
(see  also  Bund  plan  in  life  in- 
surance). 

United  Brethren  Mutual  Aid,     .    .  106 

United  States  Funeral  Directing 
Co.,  a  failure,  175 

United  States  Industrial  Insur- 
ance Co.,  organized  in  New- 
ark, N.  J.,  180  ;  reinsurance  of, 
181. 

University  Settlement  Society, 
unwarranted  attack  on  Indus- 
trial companies 213 


INDEX. 


337 


PAGE. 
V 

Valuation  of  Industrial  poli- 
cies,    122,  160 

Value,  of  Industrial  insurance, 
68,  118,  119,  147,  148,  158,  161, 
162,  177,  178,  216,  217,  221,  222, 
239,  248,  263,  264,  271,  272,  274, 
276,  277,  281,  290,  297,  298,  307, 
308,  314 ;  of  Prudential  con- 
cessions to  policy-holders,  313. 

Vaught,  Dr.  R.  L-,  on  Industrial 
insurance, 217 

Verdict  of  the  masses  on  Indus- 
trial insurance,  286,  314  (see 
also  Approval). 

Vice-President  of  The  Prudential, 
L.  D.  Ward  elected, 154 

Victoria  Assurance  Society  and 
American  life  companies,  .  .  .  31 

W 

Waldorf-Astoria,  banquet  at  the, 
1898,  252  ;  1900,  318. 

Walford,  Cornelius,  on  funeral  in- 
surance,   35 

Walker,  Amasa,  on  Government 
insurance, 35 

Walker,  Francis  A.,  on  economic 
truths  for  the  masses,  ....  47 

War,  mortality  experience  of  The 
Prudential,  255 ;  permits  to 
policy-holders,  255 ;  revenue 
taxes  on  Industrial  policies, 
255,  256. 

Ward,  Edgar  B.,  Counsel  and 
Second  Vice-President  of  The 
Prudential, 69,  127 

Ward,  L.  D.,  organizer  of  The  Pru- 
dential Friendly  Society,  69; 
elected  Vice-President  of  The 
Prudential,  154;  executive  skill 
of,  154 ;  on  negro  life  insur- 
ance, 209-211;  on  straight 
canvassing,  249-251 ;  on  claim 
payments,  257  ;  on  payment  of 
Industrial  dividends,  261  ;  on 
agency  management,  270,  271 ; 


PAGE. 

tribute  to  Superintendent  Ege- 
nolf,  282. 

Washington,  D.  C.,  effort  to  estab- 
lish Industrial  company  in,  67  ; 
Industrial  Life  Company  in,  78. 

Watchword,  Prudential  agents',  .  252 

Webb,  Sydney,  on  Fraternal  in- 
surance,    7 

Weekly-payment  plan,  first  ap- 
plied in  life  insurance,  8 ;  early 
approval  of,  14;  of  the  Amer- 
ican Popular  Life,  21  ;  of  the 
New  York  Life,  27  ;  of  the  Pea- 
body  Life,  36;  popularity  of, 
101 ;  early  instance  of,  in. 

Weekly  Underwriter,  on  life  in- 
surance for  children,  128  ;  on 
insurance  legislation,  135  ;  on 
State  supervision,  135  ;  on  In- 
dustrial lapses,  141 ;  on  Gov. 
Butler's  attack,  149  ;  on  Indus- 
trial insurance,  150 ;  on  The 
Prudential,  197 ;  on  Colorado 
legislation  of  1899,  281. 

Wells,  David  A.,  interest  in  In- 
dustrial insurance,  ....  168 

Western  and  Southern  Industrial 
Insurance  Co.,  ...  ...  181 

Western  New  York  Life  Insur- 
ance Co.,  Bund  plan  of,  ...  29 

White,  Samuel  H.,  on  Industrial 
insurance  in  1874, 44 

White,  Dr.  W.  P.,  on  Industrial 
insurance, 217 

Whitehead,  Hon.  John,  first  appli- 
cant to  Widows'  and  Orphans' 
Friendly  Society,  .  .  .no 

Widows'  and  Orphans'  Friendly 
Society,  character  of ,  37  ;  Bund 
plan  of,  38  ;  Teutonic  character 
of,  38  ;  charter  amended,  57  ; 
John  F.  Dry  den  and  the,  no. 

Willoughby,  W.  F.,  on  working- 
men's  insurance, 284 

Windsor  Hotel  fire, 271 

Wise,  Henry  A.,  on  Government 
insurance '  .  35 


338 


INDEX. 


Women,  as  Industrial  agents,  87  ; 
members  of  Colorado  Legisla- 
ture in  favor  of  Industrial  in- 
surance, 281. 

Workingmen's  insurance,  early 
efforts  at,  i,  6  ;  by  health-insur- 
ance companies,  17  ;  compa- 
nies, objects  of,  20 ;  companies 
in  1868,  20 ;  companies,  fail- 
ures of,  20,  101 ;  of  the  New 
York  Life  Insurance  Co.,  27  ; 
on  the  Bund  or  Union  plan,  27 ; 
1875,  65  ;  defined,  284. 

Workingmen's  Life  Insurance 
Co.,  Chicago,  111.,  .... 

Workingmen's  Union,  New  York 
City, 

Wright,  Elizur,  on  life-insurance 
agents,  14 ;  on  Industrial  in- 


PAGE.  |  PAGB. 

surance,  15  ;  on  post-office  in- 
surance, 16 ;  on  Government 
insurance,  16 ;  savings  bank 
plan  of  insurance,  36,  59 ; 
Family  Bank  scheme  of,  43  ; 
attacks  on  life  insurance,  43 ; 
criticism  of,  by  Insurance 
Times,  44  ;  attacks  Industrial 
insurance,  46;  misrepresenta- 
tion of,  proven,  47 ;  on  life 
insurance  for  the  poor,  64 ; 
mistakes  of,  98,  99. 
Wright,  Mrs.  Harriet  G.  R.,  ap- 
proval of  Industrial  insurance,  281 


20 


20 


Yates,  Henry  J.,  elected  Treasurer 
of  The  Prudential 154 


THIS  BOOK  IS  DUE  ON  THE  LAST  DATE 
STAMPED  BELOW 


AN  INITIAL  FINE  OF  25  CENTS 

WILL  BE  ASSESSED  FOR  FAILURE  TO  RETURN 
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WILL  INCREASE  TO  SO  CENTS  ON  THE  FOURTH 
DAY  AND  TO  $1.OO  ON  THE  SEVENTH  DAY 
OVERDUE. 


N?V    1493IL     31986 


, 


14Mar'59JB 


NOV  1  5  1985 


NOV  4.     19655  2 

REC'D 

NOV    4'6b-6PW 

LOAN  DEPT. 

rarnnsw** 

REC'D 

DEC  13^5  -1PM 

LOAN  DEPT. 

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